In the absence of harmonisation of personal income tax within the European Union, the Member States are free to choose the tax systems that they consider most appropriate. Therefore, each country uses different forms of reducing the overall tax burden of labour in order to achieve desirable social or economic results. The aim of this article is to present the diversity of tax reductions exerted by the Member States with special regard to their different effect on tax amount. It also discusses most popular tax allowances applied in the Member States with detailed glance on child allowance. Furthermore, it presents tax exemptions with division into three main categories and gives examples of them applied in selected Member States. The last part of this article analyzes tax allowances and tax exemptions in Poland in the period of 2000-2007.
Wydzial Nauk Ekonomicznych, Uniwersytet Warszawski; ul. Dluga 44/50; 00-241 Warsaw, Poland
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