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Distributional implications of tax evasion in Greece

Matsaganis, Manos and Flevotomou, Maria (2010) Distributional implications of tax evasion in Greece. Hellenic Observatory Papers on Greece and Southeast Europe (GreeSE Paper No. 31). Hellenic Observatory, London School of Economics and Political Science, London, UK.

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The shadow economy and tax evasion are both widespread in Greece. This has adverse effects in terms of horizontal and vertical equity, as well as in terms of efficiency. We take advantage of access to a large sample of income tax returns in 2004/05, and compare tax reported incomes with those observed in the household budget survey of that year. We re-weight our two datasets to make them fully comparable, and carefully select the reference population. We then calculate ratios of income under-reporting by region and income source. The synthetic distribution of reported incomes is then fed into a taxbenefit model to provide preliminary estimates of the size and distribution of income tax evasion in Greece. Income under-reporting is estimated at 10%, resulting in a 26% shortfall in tax receipts. The paper finds that the effects of tax evasion are higher income inequality and poverty, as well as lower progressivity of the income tax system.

Item Type: Monograph (Working Paper)
Official URL:
Additional Information: © 2010 Manos Matsaganis and Maria Flevotomou
Divisions: European Institute
Hellenic Observatory
Subjects: H Social Sciences > HJ Public Finance
Date Deposited: 09 Feb 2010 14:39
Last Modified: 14 May 2021 11:48

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