Public Sector Impact on Income Inequality in CEE Countries
Public Sector Impact on Income Inequality in CEE Countries

Summary/Abstract: The paper focuses on examining the impact of the public sector, specifically the tax system and expenditure structure, on income inequality in CEE countries from 1998 to 2021. A panel data estimation technique is used to analyse this relationship. The findings of the research indicate that the tax systems in the CEE countries, characterised by limited progressivity and low shares of income taxes in total tax revenues, do not contribute effectively to reducing income inequality (shares of personal income tax, direct taxes and VAT are positively connected with GINI). In contrast, social and education spending are negatively associated with income inequality. These results suggest that expenditure policies have a stronger impact than tax measures in addressing income inequality in CEE countries.

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