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WHY DO INDIVIDUALS EVADE PAYROLL AND INCOME TAXATION IN ESTONIA?

Kenneth A. Kriz, Jaanika Meriküll, Alari Paulus () and Karsten Staehr ()

No 49, University of Tartu - Faculty of Economics and Business Administration Working Paper Series from Faculty of Economics and Business Administration, University of Tartu (Estonia)

Abstract: This paper employs micro-level data to determine the factors characterizing individuals who evade payroll and income taxation in Estonia. Using logit estimation on three different cross-sectional datasets, we estimate the marginal effects of different individual characteristics on tax evasion. The three datasets give broadly analogous results. Payroll and income tax evasion is most prevalent in small firms and in the construction and agricultural sectors. Evasion is more common among individuals who work part-time, are of non-Estonian ethnicity, have relatively short education, earn a low income and are men. Tax evasion is more frequent among the young and the elderly than among the middle-aged. There are clear regional differences. The overall picture is that the relatively disenfranchised are most likely to evade payroll and income taxation in Estonia.

Keywords: Tax evasion; unreported work; incentives; tax system (search for similar items in EconPapers)
JEL-codes: H26 H24 D19 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007
New Economics Papers: this item is included in nep-eec and nep-pbe
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Citations: View citations in EconPapers (15) Track citations by RSS feed

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