An Econometric Study on Reasons of Tax Gap: The Case of Turkey


Eryiğit K. Y., Gerçek A., Uygun E.

in: Current Debates on Public Finance Theory and Practice, M. Erkan Üyümez / Canatay Hacıköylü, Editor, Peter Lang Publishing, Inc., Berlin, pp.159-174, 2023

  • Publication Type: Book Chapter / Chapter Research Book
  • Publication Date: 2023
  • Publisher: Peter Lang Publishing, Inc.
  • City: Berlin
  • Page Numbers: pp.159-174
  • Editors: M. Erkan Üyümez / Canatay Hacıköylü, Editor
  • Bursa Uludag University Affiliated: Yes

Abstract

The tax gap is an integral part of economies. Almost every country has a tax gap.

However, no tax administration has been able to develop a universal calculation

method for measuring the tax gap that can be applied in other countries

(Raczkowski & Mroz, 2018: 567).

The tax gap is that the taxpayers do not fully declare their tax obligations in

their tax returns, pay their taxes incompletely despite fully declaring their tax

obligations, or do not submit the necessary tax returns on time (Joint Committee

on Taxation, 2019: 2). The tax gap indicates the general level of non-compliance

of taxpayers for a given tax year. It includes deficiencies in income tax, corporate

tax, expenditure taxes and other taxes. Country economies do not struggle with

tax losses and evasion as long as the tax gap remains within reasonable limits.

However, with the increase in the tax gap, it emerges as a major problem that

prevents the collection of budget revenues and the fair distribution of income

(Mróz, 2010: 96–118). Therefore, economies need to determine the tax gap to

control the tax gap rate. Therefore, measurement of the tax gap serves as a system

that can take the necessary measures to protect the financial interests of the

countries in the public administration process (Raczkowski, 2015: 567).