All taxes that are characterized by the dynamicsdecrease in the rate of the increase in the amount of income that is taxed by this tax is referred to the category of regressive. This is a fairly extensive group of taxes, it includes all indirect taxes. Therefore, the regressive tax as a kind of indirect is established in the form of a premium to the price of commodity products or tariffs for which work was done or services were provided. This parameter is the main thing that distinguishes a regressive tax, like all indirect taxes, from direct taxes.
The mechanism for levying such taxes is,that the primary tax collector here is not the state, as such, but the owner of the enterprise or company that produced products or provided services. After the completion of the production process, the enterprise sells products at certain prices or tariffs, which include a surcharge (VAT, for example). The enterprise receives the proceeds from the sold products and, based on its size, pays the tax to the state. A mechanism operates under which the owner, as already mentioned, acts as an assembler, and the buyer as a payer of taxes. In addition, under such a mechanism, the tax is masked from an individual person, he can not know exactly its magnitude.
In the economy, a regressive tax can be paid in the following forms:
- value added tax (VAT). This is the value added to the value of the commodity at all stages of its production and sales process. This regressive tax is levied as the goods pass through the stages of the production process and the sale process, until they reach the final buyer;
- Excise. This tax is primarily intended for establishment in respect of items of mass demand (food, tobacco, sanitation and hygiene, etc.). Excises include payments for communal and other common services to the population;
- The customs duty is the same as the excise duty, only with respect to goods imported from abroad;
- An environmental tax (fee) is a kind of indirect tax that is levied on activities related to the risks of damage to the natural environment.
It is generally accepted that regressive taxationsystems most worsen the financial situation of the poor. This is why the audit of income tax begins to acquire special importance in ensuring the principles of social justice. Its main goal is to check the compliance of the values and rules of calculating the tax on an enterprise with the requirements of legislation, namely Ch. 25 of the Tax Code. The audit content includes a check:
- all types of accounting for the calculation of this tax;
- ascertaining the amounts that may not be taken into account when calculating the tax;
- formation of the tax base;
- accounting statements in the part relating to this tax;
- classification and detailing of information on all tax liabilities, including unpaid taxes;
- procedures for paying taxes to the budget.
To somehow soften the hardthe impact of the regressive system on the most vulnerable groups of the population and bring its essence closer to the principles of social justice, proportional schemes of its calculation are applied. This applies in accordance with the principle of "marginalism" - the theory of the Austrian economist Karl Menger, which states that any remaining amount of money from a poor person is always more valuable to him than the same amount for a rich man.
The mechanism of such a proportional calculusis that the final tax rate is set in accordance with a specific amount of profit. It should be noted that the proportional principle does not remove the negative influence to the end. Especially it concerns excises as the most regressive type of indirect taxes. Therefore, a restrictive approach is applied to them, that is, the average and marginal rates are set. However, not everything is solved here, since it is not possible to apply the principle of proportionality and the principle of rate limits at the same time. The fact is that with this approach, these rates are automatically equalized.