| Abstract: |
Many problems emerge since it is widely believed that high tax rates and
ineffective tax collection by government are the main causes contributing to
the rise of the informal economy. Already the economists have established a
relationship between tax rates and tax evasion or size of the informal
economy. The higher is the level of taxation, the greater incentive is to
participate in informal economic activities and escape taxes. At the
macroeconomic level, there is a number of so-called indirect methods used to
estimate the size and dynamics of informal economy, reported in literature as
“Monetary Approach”, “Implicit Labour Supply Method”, “National Accountancy”,
“Energy Consumption Method”, etc. Unfortunately, many times there are huge
differences among the estimated shares of informal or underground economy
obtained by various methods. For instance, in case of Romania the figures are
between about 20% of GDP, obtained on the base of the energy consumption
method and more than 45% computed by using the monetary approach. Also, the
figures reported by the National Institute for Statistics (NIS), based on
national accounts methodology, increased (mainly due to changes in
methodology) from about 5% in 1992, to 18% in 1997 and to 20-22% after 2000.
Adding to these figures about 7% of GDP, representing the estimated level for
self-consumption in case of a rural household, legal non-registered but
informal, resulted that last years the informal economy is responsible of
27-29% of national economy. In this article, coming from certain general
accepted finding of the theory in matter of modelling underground economy, we
concentrate on evaluating analytically the limit-values of certain important
parameters involved in models used to estimate the size of underground economy
and to explain the mechanisms of its dynamics. Then we shall simulate some
exercises on available data. The second goal of the paper is to report some
conclusions of our investigation based on data supplied by special surveys
organised in Romania. Also, in order to see since certain hypotheses
(referring to the complex transmission mechanism from the tax policy decisions
to the effective implication of agents into informal economy) are
statistically verified and to extend the study from the aggregate level to a
deep research inside the population set in regions, we used data supplied by
this special large survey, which already were processed and are available in
our database. |