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Model for determining subjective and objective factors of tax evasion

Author

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  • Saudin Terzić

    (Indirect Taxation Authority of Bosnia and Herzegovina)

Abstract

Tax evasion is affected by many diverse subjective and objective factors. They are intertwined and determined as well as mutually connected and complementary. This paper is aimed at and orientated towards identifying the factors, both subjective and objective, that affect tax evasion in Bosnia and Herzegovina. The main research result indicates that tax evasion has multiplicative effects. It destroys the reputation of institutions primarily and, in particular, the reputation of the tax administration, it poses a threat to the tax system and rule of law, causing taxpayers distrust of the tax system itself. Thus, by reducing tax evasion the situation in public finances improves substantially. The paper shows the theoretical analysis of the phenomenon of tax evasion (which is not a goal in itself), including the empirical analysis of the subjective and objective factors that have the greatest influence on tax evasion in Bosnia and Herzegovina and the assessment of the amount of taxes evaded.

Suggested Citation

  • Saudin Terzić, 2017. "Model for determining subjective and objective factors of tax evasion," Notitia - journal for economic, business and social issues, Notitia Ltd., vol. 1(3), pages 49-62, December.
    • Handle: RePEc:noa:journl:y:2017:i:3:p:49-62
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    File URL: http://www.notitia.hr/RePEc/noa/journl/05_2017.pdf
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    References listed on IDEAS

    as
    1. Edward Christie & Mario Holzner, 2006. "What Explains Tax Evasion? An Empirical Assessment based on European Data," wiiw Working Papers 40, The Vienna Institute for International Economic Studies, wiiw.
    2. Kirchler,Erich, 2009. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, number 9780521757478, October.
    3. Munawer Sultan Khwaja & Rajul Awasthi & Jan Loeprick, 2011. "Risk-Based Tax Audits : Approaches and Country Experiences," World Bank Publications - Books, The World Bank Group, number 2314.
    4. Francesco Flaviano Russo, 2010. "Tax Evasion and Community Effects in Italy," CSEF Working Papers 254, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Kirchler,Erich, 2007. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, number 9780521876742, October.
    6. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    tax; tax evasion; tax system; tax administration; tax burden and tax rate; corruption;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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