Journal of Tax Research

Abstract

The aim of this article is to investigate the effect of government effectiveness on reducing tax evasion in selected countries during the period 2000-2010. By using panel data econometric, tax evasion as a percent of GDP is used as a dependent variable and tax burden, tax morale, government effectiveness, GDP per capita, openness, the share of value added of industry and services in GDP and the ratio of urban population to total population are considered as independent variables. The results from estimated model suggest that the government effectiveness is the most important determinant of tax evasion in the selected countries. The results also indicate that the effects of GDP per capita, tax morale, openness and the relative share of industry and services sectors in GDP are negative and significant. Tax burden and urbanization have positive and significant effect on tax evasion.