One percent of personal income tax as a source of revenue in public benefit organisations

Abstract

Motivation: Expert literature addresses the issue of funds transferred in the form of 1% of personal income tax for public benefit organisations (PBOs). Taking into consideration the fact that previous papers concentrated on the macro approach, a research gap has been observed regarding the analysis of the significance of the 1% mechanism as a source of revenue from the perspective of individual organisations.

Aim: The purpose of this paper is to assess the significance of 1% of personal income tax for thirty PBOs that receive the highest contributions from this source. This research aims to study whether the 1% mechanism is the main source of revenue for those PBOs and if the share of funds from 1% in total revenues was stable in subsequent years.

Results: The funds from 1% do not constitute the major source of total revenues for the PBOs receiving the highest contributions under the 1% mechanism. The PBOs analysed in this paper differ in their structure of revenues and the share of funds from 1% of personal income tax in total revenues equals from 5% to 100% in the examined period. In eleven out of thirty PBOs the share of 1% income tax did not exceed 50% of total revenues in any of the years analysed. Only for three PBOs the difference between the maximum and the minimum share of funds from the 1% mechanism in total revenues was less than 5 percentage points in a given period.