State regulation of processes aimed at reducing income inequality in the Republic of Moldova

Abstract

The actuality of the article is determined by the fact that income inequality is one of the most serious problems in the Republic of Moldova, which requires state regulation of processes in this area. The purpose of the article is to develop a set of measures aimed at reducing income inequality among the population of the Republic of Moldova. This goal is achieved through methodological approaches that, on the one hand, involve increasing the incomes of low-income population groups and, on the other hand, redistributing high and very high incomes from wealthy groups. Research results. Measures have been developed to reduce income inequality among the population. These include: a) increasing the minimum wage by aligning it with EU standards. It is proposed to gradually increase the minimum wage to reach 50% of the average monthly wage in the national economy; b) increasing pension amounts by improving the pension system. In particular, it is recommended to modernize the indexation coefficient to reflect not only the depreciating effect of consumer price index growth but also the growth in average wages in the economy; c) improving the personal income taxation system. It is proposed to: i) increase the amount of personal tax exemption and introduce tax deductions for medical treatment and education; ii) replace the current flat tax system with a progressive taxation scale. The article was developed within the framework of Subprogram 030101 „Strengthening the resilience, competitiveness, and sustainability of the economy of the Republic of Moldova in the context of the accession process to the European Union”, institutional funding.