Page 29 - IDEA Study 7 2015 Working Beyond Pensionable Age

Table 1: Percentage change in total tax revenues increase in employment in percentage points 0 5 10 25 low rate reduction standard decreased wage wage -0,5% -0,5% 0,5% 0,2% 1,5% 0,9% 4,3% 3,2% high rate reduction standard decreased wage wage -1,1% -1,1% -0,2% -0,4% 0,7% 0,3% 3,6% 2,4% Source: SILC 2012 for the Czech Republic, TAXBEN, own computations Table 2: Percentage change in the sum of total tax revenues and retirement benefit expenditures increase in employment in percentage points 0 5 10 25 low rate reduction standard decreased wage wage -0,5% -0,5% 0,7% 0,4% 1,7% 1,2% 5,0% 3,9% high rate reduction standard decreased wage wage -1,1% -1,1% 0,0% -0,2% 1,0% 0,5% 4,3% 3,1% Source: SILC 2012 for the Czech Republic, TAXBEN, own computations A 10 % increase in employment among healthy non-workers aged below 70 would increase the sum of direct taxes collected (income plus payroll taxes) in all the situations considered (Table 1). This increase in direct taxes collected is strengthened by a decrease in the sum of early retirement pensions paid (Table 2). The composite effect of these changes in revenues and expenditures is positive if employment increases by at least 5 % of healthy non-workers below the age of 70, except in the case when the social security reduction is high10, and pensioners remain employed for 80 % of the average wage of their younger colleagues with the same education and gender – here an employment increase by 5 percentage points would be insufficient to raise public revenues. 10 By an amount equal to 1) the full contribution paid by the employee for individuals eligible for early retirement, and 2) twice the contribution paid by the employee for individuals eligible for standard retirement. 27