Generolo Jono Žemaičio Lietuvos karo akademija

Scientific literature particularly emphasizes the threats to the tax system emerging from tax incentives, as well as the need to control them in order to get the desired effect in society and to ensure the sustainability of public finance. Nevertheless, it can be noticed that relatively weak tax incentives control mechanisms exist in practice, in comparison with control programs of government spending. Only a small number of countries use tax incentives assessment models to justify political decisions. Evaluating Lithuanian practice and comparing it with other countries, it is obvious that Lithuanian government has no legal mechanism for evaluating the necessity and efficiency of tax incentives. Due to this reason, the tax incentives assessment model is necessary in order to evaluate Lithuanian personal income taxation and create competitive and sustainable tax system. The aim of the paper is to form the assessment model for income tax of individuals incentives, based on theory and practice of foreign countries and international organizations, and apply it to evaluate the impact of personal income tax incentives on public finance in Lithuania. As a primary task, the authors conducted an analysis of a number of theoretical and practical tax incentives assessment models. Second, personal income tax incentives are analyzed from different perspectives – as tax benefit, as tax expenditure, and as fiscal measure. Finally, the authors suggest the complex and multifaceted model that can be used to evaluate the impact of income tax of individuals incentives on public finance and their sustainability. It is believed that the results obtained due to the study carried out for the purpose of the present paper will help to shape favorable personal income taxation system for sustainable development process. The study was conducted using the methods of academic literature and statistical data analysis, meta-analysis, qualitative content analysis and correlation-regression analysis.

The paper aims at distinguishing the assumptions and component parts of financial system sustainability formation. Partly, sustainability of financial system can be expressed through the functions of financial system. Three financial subsystems are distinguished in the research: public finance, business finance and personal finance. The sustainable and efficient operation of each subsystem contributes to the sustainability of financial system as a whole. Also, sustainability of each of the subsystem can be measured by different indicators. In order to determine the strength of impact of various financial functions to the financial system such indicators as capital investments into financial and insurance activities, financial and insurance activities’ value added, as well as value of production and purchase of goods and services by the financial companies is analysed. Finally, the scheme of financial system sustainability is presented. The key conclusion of the research states that the synergistic effect of sustainable development of three fields of finance influences the sustainable development of the whole financial system and even can spread its impact beyond the limits of financial system.