Tax Evasion across Central and Eastern Europe: evidence from a panel model

Abstract

Mobilization of domestic revenue is of paramount importance in the context of the Central and Eastern Europe since most of these regional countries are dependent on multidimensional development assistance which are expected to exhibit a decreasing trend in future. However, the low ratio of tax revenue to GDP scenario across CEE is a major area of deep concern for the associated countries that have been ineffective in making remarkable improvements in their respective tax-GDP ratio. Thus, this paper aims to fill the gap in existing literature by modeling the tax evasion phenomenon across Estonia, Latvia, Lithuania, Czech Republic, Slovakia, Poland, Hungary, and Slovenia, Romania, Bulgaria and Croatia. The author employ annual data of relevant macroeconomic variables for the time period between 2004 and 2016. As part of the regression model, the authors express the tax-GDP ratio as a function of macroeconomic factors attributing to tax compliance in these countries. The collected data was analyzed using panel estimation techniques were also considered for robustness of the findings.