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The Underground Economy,The Corruption . A Way Of Manifesting The Fiscal Evasion

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  • Din Alina Valentina

    (Universitatea Lucian Blaga din Sibiu, Stiinte Economice)

Abstract

Fiscal evasion is mainly found within the underground economy, came to the specialists' attention within the 1960s, moment in which it took a great extent. The main cause which leads to activities within the underground economy is represented by the increase of direct taxes, which has the largest influence, followed by the intensity of the regulations and the complexity of the fiscal system. The imposed taxes determine more and more countries to act within the underground economy, as long as there is not a proper offer of public goods and infrastructure. In his study, Vito Tanzi indicated as the main cause of the underground economy the level of taxes.(Tanzi,1983:11-15) He adds the instability of the legislative framework, legislative restrictions imposed within certain states, corruption and bureaucracy. Corruption and the activities specific to the underground economy are realities all the states confront with. Gathering information about the dimensions of corruption and the connection with the underground economy proves to be a task which is impossible to achieve, because all the people involved within these mechanisms prefer not to be identified. Even if the underground economy and corruption are considered as being twins, the questions which appear are: who needs them and who fights against them? Theoretically speaking, corruption and the underground economy can be complementary or substitutable.The anticorruption efforts have to focus on a real reform of the administrative system, whereas the citizen'(tm)s perception on corruption is mainly based on his personal experiences in direct connection with the state institutions. Both the public sector as well as the private sector should become more responsible, so that the public institutions to be able to carry out their obligations under integrity conditions and without external pressure or implication. Corruption attracts the economic agents to the underground economy, which leads to a reduction of taxes collected by the state, finally materialized in the increase of the fiscal burden for a less and less number of tax payers.

Suggested Citation

  • Din Alina Valentina, 2012. "The Underground Economy,The Corruption . A Way Of Manifesting The Fiscal Evasion," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 459-463, December.
    • Handle: RePEc:ora:journl:v:1:y:2012:i:2:p:459-463
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    References listed on IDEAS

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    1. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
    2. Cebula, Richard, 1996. "An Empirical Analysis of the Impact of Government Tax and Auditing Policies on the Size of the Underground Economy: The Case of the United States, 1973-94," MPRA Paper 49810, University Library of Munich, Germany.
    3. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-392, May.
    4. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobatón, Pablo, 1998. "Corruption, public finances and the unofficial economy," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34372, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    More about this item

    Keywords

    fiscal evasion; underground economy; corruption; taxes; fraud;
    All these keywords.

    JEL classification:

    • G - Financial Economics

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