Impact of the efficiency of the tax administration on tax evasion

This paper was presented on XI Balkan Conference on Operational Research, Serbia, 7–11 September, 2013.

We thank Dr. Birger Nerré for the valuable comments to our paper.

Figures & data

Table 1. Value of inputs and outputs.

DMU	Inputs			Outputs
	X1^*	X2^**	X3^**	Y1^***	Y2^***
Bulgaria	1.31	59.00	166.00	11.10	2.50
Czech Rep.	1.43	17.00	169.00	5.10	1.80
Hungary	1.60	46.00	124.00	9.90	8.90
Serbia^****	0.90	177.00	125.00	2.71	3.38
Slovak Rep.	1.65	103.00	100.00	17.70	9.60
Slovenia	0.86	83.00	109.00	55.70	1.60
Latvia	1.31	11.00	128.00	18.00	4.10
Lithuania	0.91	40.00	61.00	34.30	2.50
Finland	0.64	17.00	19.00	28.00	5.20
Estonia	0.77	17.00	16.00	12.50	2.00
Ireland	0.76	17.00	9.00	13.40	1.60
Portugal	1.55	17.00	121.00	14.40	9.70
Spain	0.87	17.00	66.00	34.60	4.90

Note: The meaning of input and output parameters has given earlier; the output elements for the Serbian Tax Administration have been calculated by the authors.

Source:

^* IOTA (2013);

^** IFC (2012);

^*** OECD (2011).

Table 2. Efficiency scores.

	DMU	Score	Benchmarks
1	Bulgaria	0.23	9 (0.48)
2	Czech Rep.	0.23	12 (0.14) 13 (0.09)
3	Hungary	0.68	9 (1.71)
4	Serbia	0.46	9 (0.65)
5	Slovak Rep.	0.72	9 (1.85)
6	Slovenia	1.00	1
7	Latvia	0.99	12 (0.20) 13 (0.44)
8	Lithuania	0.77	6 (0.20) 9 (0.82)
9	Finland	1.00	6
10	Estonia	0.53	9 (0.37) 11 (0.16)
11	Ireland	1.00	1
12	Portugal	1.00	2
13	Spain	1.00	2

Source: Authors’ calculation.

Table 3. Value of dependent (y) and independent variables (Z_i).

DMU	DEA efficiency score – Z1	Rate of unemployment (%)^* – Z2	Total number of employees in tax administration^** – Z3	Grey economy (% of GDP)^*** – y
Bulgaria	0.23	12.30	7.708	32.30
Czech Rep.	0.23	7.00	14.710	16.40
Hungary	0.68	10.90	22.482	22.80
Serbia	0.46	22.40	6.856	30.10
Slovak Rep.	0.72	14.00	8.781	16.00
Slovenia	1.00	8.90	2.330	16.00
Latvia	0.99	14.90	4.069	26.50
Lithuania	0.77	13.30	3.296	29.00
Finland	1.00	7.70	5.130	13.70
Estonia	0.53	10.20	1.555	28.60
Ireland	1.00	14.70	6.874	12.80
Portugal	1.00	15.90	11.566	19.40
Spain	1.00	25.00	27.613	19.20

Note: In the case of Serbia, the Rate of unemployment is published by Statistical office of the Republic of Serbia (2013), and the Grey economy (%GDP) in the research of Krstić, G. et al. (2013).

Source:

^* Eurostat (2013);

^** IOTA (2013);

^*** Schneider (2012)

Table 4. Linear regression result.

Variables	Coefficient	t test	Prob
DEA efficiency score – Z1	−14.07136	−2.55	0.031
Rate of unemployment (%) – Z2	0.6663669	1.99	0.078
Total number of employees in tax administration – Z3	−0.0003495	−1.59	0.147
Cons.	26.37869	4.84	0.001
R-squared = 0.509	Adj R-squared = 0.345	F (3, 9) = 3.11	Prob (F statistic) = 0.0814

Source: Authors’ calculation using the Stata software.

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