Tackling the Informal Sector in East-Central Europe

Authors

  • Colin C. Williams Professor of Public Policy, Management School, University of Sheffield, Sheffield, South Yorkshire, U.K.
  • Ioana A Horodnic Department of Management, Marketing and Business Administration, Alexandru Ioan Cuza University of Iasi, Romania

Abstract

To tackle participation in the informal sector, an emergent literature has called for the dominant deterrence approach, which increases the penalties and risks of detection, to be replaced and/or complemented by a tax morale approach that fosters citizens’ commitment to compliance. Applying logistic regression analysis to the results of a Eurobarometer survey of 11 East-Central European countries reveals that, although both approaches reduce the likelihood of participation in the informal sector, deterrence measures reduce participation only when tax morale is low and have little impact when tax morale is high. The paper then discusses the policy implications of these findings.

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06-12-2017

How to Cite

Williams, C. C., & Horodnic, I. A. (2017). Tackling the Informal Sector in East-Central Europe. Journal of Tax Administration, 3(2), 65–86. Retrieved from https://journals.docuracy.co.uk/jota/article/view/107