Comparative Study on Flat Tax and Progressive Tax in Albania

Abstract

The choice between progressive and flat tax systems is widely debated not only in the public finance but usually associated with political and government issues. The fiscal policies are essential key points of political platforms because of their role on the public life. Albania for several years has applied the flat tax which from that government was called the revolution tax, while since 2014 up to now is applied the progressive taxation. While the flat tax system is often highlighted for its simplicity and the administration facilities, the progressive tax system is favored for its ability to reduce income inequality and promote social justice. This paper presents a comparative study of the advantages and disadvantages of progressive and flat tax systems in Albania, with a focus on the policy implications for sustainable economic and social development. This study initially realizes a literature review on the main theoretical considerations for progressive taxation and flat taxation also reflecting the advantages and the disadvantages for each of these forms of taxation. From the practical point of view this article compares flat taxation and progressive taxation through the available data investigating the progress of each of them and the impact they have had on economic growth.

Received: 07 February 2023 / Accepted: 25 April 2023 / Published: 5 May 2023