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Fiscal burden differentiation between European Union countries as a source of opportunism, moral hazard and unproductive entrepreneurship

Author

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  • Andrzej Pestkowski

    (Wroclaw University of Economics)

Abstract

Free movement and freedom of establishment existing within the European Union institutions are the main factors which make European Union open for business activities. However, it should be noted that all EU countries have their own tax systems and fiscal policy. This, in turn, differentiates fiscal burden of government imposed onto its taxpayers in each Member State. These differences frequently distort the conditions of establishment. As every entrepreneur is willing to minimize costs, especially when their source are compulsory taxes, mass tax migration between Member States might be expected. Tax avoidance and tax evasion, being a form of tax migration, imply numerous economic, social and legal problems. The aim of this paper is to identify these problems along with their causes and effects in terms of fiscal burden differentiation between Member States. Descriptive, qualitative and quantitative analyses have been applied in order to explain the abovementioned phenomena. Additionally, the analyses have been accompanied by case studies.

Suggested Citation

  • Andrzej Pestkowski, 2016. "Fiscal burden differentiation between European Union countries as a source of opportunism, moral hazard and unproductive entrepreneurship," Working Papers 24/2016, Institute of Economic Research, revised May 2016.
    • Handle: RePEc:pes:wpaper:2016:no24
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    More about this item

    Keywords

    fiscal burden; tax systems; opportunism; moral hazard; unproductive entrepreneurship;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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