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Tax evasion and tax changes in Hungary

Author

Listed:
  • Judit Krekó

    (Magyar Nemzeti Bank (central bank of Hungary))

  • Gábor P. Kiss

    (Magyar Nemzeti Bank (central bank of Hungary))

Abstract

Tax evasion reduces the efficiency of the economy as unequal opportunities of tax evasion leads to an inefficient distribution of resources. In Hungary, based on data for 2005–2006, tax evasion resulted in a transfer of 7.9 per cent of GDP from taxpayers to tax evaders. Following measures aimed to reduce tax evasion, this transfer was estimated to be 6.7 per cent of GDP in 2006 and 2007. Underlying reasons for tax evasion are the different burdens on labour and capital incomes. According to international experience, either the control of splitting labour and capital incomes or bringing their contribution burdens closer to one another can help in this situation. The effect of administrative measures is often temporary, because they do not improve tax-compliance attitude. A positive change in taxpayers’ attitude is an especially difficult task; one of its possible means can be a shift in the tax burden in favour of local taxes.

Suggested Citation

  • Judit Krekó & Gábor P. Kiss, 2008. "Tax evasion and tax changes in Hungary," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 3(1), pages 24-34, April.
    • Handle: RePEc:mnb:bullet:v:3:y:2008:i:1:p:24-34
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    File URL: http://www.mnb.hu/letoltes/mnb-bull-2008-04-judit-kreko-gabor-p-kiss-en.pdf
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    Citations

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    Cited by:

    1. Gabor P. Kiss, 2022. "There and Back Again - Six Fiscal Tales from the Past Decades," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(3), pages 73-100.
    2. Dr. Imre Zoltán Nagy, 2011. "The Fight against income evasion in Hungary - Acta Politechnica Hungarica," Working Paper Series 1102, Óbuda University, Keleti Faculty of Business and Management.

    More about this item

    Keywords

    taxation; tax evasion; hidden economy.;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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