“Balkan countries challenge–Individual Income taxes effects versus differential value added tax algorithms on regional government revenues”.

Abstract This study addresses to the individual incomes tax (IIT) effects versus the differential value added tax (VAT) algorithms in Balkan countries government revenues. Therefore initially a fixed effects panel regression model is explored regarding Albania, Kosovo, Macedonia, Serbia, Montenegro and Bosnia-Herzegovina as per 1991-2014 period at 95% confidence level aiming to analyze the impact of some macro-variables that vary over time between the countries with a special regard to the IIT and VAT (which are bias predictors) impact on government tax revenues. Correspondently its results confirm a controversy in terms of VAT effects versus the one of IIT on Balkan countries government revenues. Meanwhile pursuing a linear regression analysis through the neighboring countries the VAT effects prevalence on tax revenues / GDP ratio reveals only in Albania case. Comparatively the additional predictors generally impacting the variable in question in the singular “state-analysis” are: GDP per capita, Agriculture/GDP ratio, inflation rates and external debt. Certainly, this helps in the understanding of the necessary economics policies to be implemented aiming the acceleration of Balkan area economic growth and the European Union accession in the near future.