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Comparing Personal Income Tax Gap in the Czech Republic and Slovakia

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  • Jan Hájek
  • Cecília Olexová

Abstract

This paper deals with the personal income tax gap in the Czech Republic and Slovakia. One of its sections specifically addresses the relation between the tax gap and various forms of tax evasion concerning the personal income tax, subsequently setting them in the context of its calculation. The key implication of this paper is the estimation and comparison of the personal income tax gap between the Czech Republic and Slovakia using the income method, broken down into specific types of tax evasion, namely (i) unreported income subject to payroll taxes, (ii) misreported tax base by self-employed individuals (i.e., sole proprietors of unincorporated businesses), and (iii) hidden employment. In line with the existing academic literature, a greater magnitude of the tax gap was found for income reported by self-employed persons (i.e., sole proprietors of unincorporated businesses) than for persons with income from dependent activities (i.e., employment and similar legal concepts).

Suggested Citation

  • Jan Hájek & Cecília Olexová, 2022. "Comparing Personal Income Tax Gap in the Czech Republic and Slovakia," Politická ekonomie, Prague University of Economics and Business, vol. 2022(1), pages 27-50.
    • Handle: RePEc:prg:jnlpol:v:2022:y:2022:i:1:id:1341:p:27-50
    DOI: 10.18267/j.polek.1341
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    References listed on IDEAS

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    1. Buehn, Andreas & Schneider, Friedrich, 2008. "MIMIC Models, Cointegration and Error Correction: An Application to the French Shadow Economy," IZA Discussion Papers 3306, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    Tax gap; personal income tax; Czech Republic; Slovakia;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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