Academic Scientific JournalsSelected aspects of fiscal policy in central Europe: case of Slovakia
Keywords:
sustainability of public finances, VAT efficiency, VAT revenue lossesAbstract
The sustainability of public finances in Slovakia is significantly associated with increasing VAT efficiency and reducing VAT revenue losses. VAT as a major tax revenue source in Slovakia is yielding almost 40 % of total tax revenues, but more than one third of potential VAT is not levied. Discrepancy between the growth of VAT revenues and the growth of its macro-economic base in recent years may imply the existence of tax evasion as well as low efficiency of VAT collection. Since Slovakia becomes a Member of the EU in 2004, the VAT revenue losses almost tripled with its peak in 2012. Due to the measures combating VAT evasion and increasing efficiency of VAT collection, the VAT revenue losses in Slovakia decreased in absolute and relative terms, but still are above the EU average. The aim of the paper is to outline the VAT gap development in Slovakia and identify the statistically significant variables that have an impact on the VAT gap using a simple regression analysis. Based on our analysis, we may conclude that VAT gap share responds negatively to the effective VAT rate and VAT revenue to GDP ratio and positively to the final consumption of households and the size of the shadow economy.
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