The relationship of income taxation, social benefits and motivation to work in Czechia

Ing. Eliška Challise, BA

Master's thesis

Abstract:

In this thesis, I discourse the relationship of personal income taxation, state benefits and the welfare systems, and how these systems are intertwined and defined to impact the human behaviour and general motivation to work. I further explore a variety of factors like housing, education, aging population, as well underlining human motivators and welfare together with the labour office mechanisms and support provided to the unemployed. As identified in this thesis, there are steps which the government could take to look at the redistribution and overall functioning and approach in building an effective support system by altering the way it looks at the possible means of support and moving away from solely providing support through monetary means. I propose the government adopts a more progressive income tax system with a greater number of tax brackets and introduce an untaxable personal allowance from personal income; the government could consider increasing income tax rates, under the condition that it also works towards providing a larger range of benefits and increased living standard for all Czech citizens. Furthermore, key findings also propose that the Labour Office ought to provide a more sophisticated care and support system to jobseekers and general population through means of personal support, guidance and professional coaching and trainings through regular face-to-face and online meetings in so increasing skill level and employability of the population. The government focus should be aimed on the support and inclusion of single parents or mothers into the workplace and work towards building a working environment which permits mothers to return to the workplace if she chooses to, even whilst on parental leave. The government should work to decrease housing costs, or making housing more attainable and affordable, allowing people to be able to live proportionally inexpensively based on their income is one as that is one of the key fundamental steps in achieving a better minimal welfare standard.

Abstract:

In this thesis, I discourse the relationship of personal income taxation, state benefits and the welfare systems, and how these systems are intertwined and defined to impact the human behaviour and general motivation to work. I further explore a variety of factors like housing, education, aging population, as well underlining human motivators and welfare together with the labour office mechanisms and support provided to the unemployed. As identified in this thesis, there are steps which the government could take to look at the redistribution and overall functioning and approach in building an effective support system by altering the way it looks at the possible means of support and moving away from solely providing support through monetary means. I propose the government adopts a more progressive income tax system with a greater number of tax brackets and introduce an untaxable personal allowance from personal income; the government could consider increasing income tax rates, under the condition that it also works towards providing a larger range of benefits and increased living standard for all Czech citizens. Furthermore, key findings also propose that the Labour Office ought to provide a more sophisticated care and support system to jobseekers and general population through means of personal support, guidance and professional coaching and trainings through regular face-to-face and online meetings in so increasing skill level and employability of the population. The government focus should be aimed on the support and inclusion of single parents or mothers into the workplace and work towards building a working environment which permits mothers to return to the workplace if she chooses to, even whilst on parental leave. The government should work to decrease housing costs, or making housing more attainable and affordable, allowing people to be able to live proportionally inexpensively based on their income is one as that is one of the key fundamental steps in achieving a better minimal welfare standard.

Keywords

Unemployment, employment, labour office, welfare, social benefits, credits, incentives, equality, distribution, support, inclusion, work-life balance, working conditions, income, real income, nominal income, wages, wage inelasticity, taxes, gross taxation, super-gross taxation, fiscal policy, monetary policy, motivation, nominal rigidity, consumer behaviour, housing.

Language used: English

Date on which the thesis was submitted / produced: 2. 5. 2022

Thesis defence

• Date of defence: 15. 8. 2023
• Supervisor: doc. Ing. Jan Mertl, Ph.D.
• Reader: doc. Mgr. Ing. Petr Wawrosz, Ph.D.

University of Finance and Administration

Master programme / field:
Economics and Management / Economics and Management