Personal Income Tax – PIT

Abstract

This study examines the role of personal income tax (PIT) in ensuring fiscal stability, income redistribution, and economic development within modern economic systems. The research analyzes the impact of PIT structure, tax rates, and administrative efficiency on key economic indicators such as government revenue, income inequality, and labor market formalization. The findings indicate that PIT is a crucial instrument for generating stable budget revenues and promoting social equity through income redistribution mechanisms. The study also highlights the differences between progressive and flat tax systems, emphasizing that while progressive taxation is more effective in reducing inequality, flat tax systems improve compliance and administrative simplicity. The experience of Uzbekistan, which has implemented a 12% flat PIT rate, demonstrates that simplified tax systems can enhance transparency, encourage formal employment, and increase tax revenues. Furthermore, the research identifies digitalization as a key factor in improving PIT administration and compliance. The results confirm that an effective PIT system requires a balanced approach combining efficient tax design, institutional capacity, and economic formalization.