What is it about?
Until now, the undeclared economy has been tackled in Balkan countries by increasing the penalties and risk of detection so as to deter participation. Recently however, calls have been made for a new more indirect approach that improves tax morale in order to foster a culture of commitment to compliance.The aim of this paper is to evaluate these contrasting policy approaches.
Why is it important?
Reporting evidence from 1,018 face-to-face interviews conducted in Bulgaria during 2013, logistic regression analysis reveals no association between participation in undeclared work and the perceived level of penalties and risk of detection, but a strong association between participation in undeclared work and the level of tax morale.
The following have contributed to this page: Professor Colin C Williams and Mr Josip Franic