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Tax Evasion, Trust, and State Capacities

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Nicolas Hayoz and Simon Hug

Many recently democratized countries in Central and Eastern Europe, having escaped from communist rule and planned economies, face pressing problems related to the notions of tax evasion, trust and state capacities. Tax morale in changing political and economic contexts is of crucial importance. This raises a series of questions: What are the conditions under which people agree to pay taxes? Why do people avoid taxes? To what extent do the reasons for tax evasion vary from one region to another?
The authors of this volume address these questions and try to assess the progress which has been made in Central and Eastern Europe with regard to improving tax morale through tax reforms and strengthening of extractive state capacities. A main insight is the complex causal relationship between the quality of fiscal institutions and tax morale. In addition, huge differences between countries of the former Soviet Union and central European countries, which are now members of the EU, can be observed not only at the level of democratic governance, of state capacities and the structures of trust, but also with regard to tax morale.
Contents: Nicolas Hayoz/Simon Hug: Introduction – Eric M. Uslaner: «Tax Evasion, Trust, and the Strong Arm of the Law» – John T. Scholz: Contractual Compliance: Tax Institutions and Tax Morale in the U.S. – Lars P. Feld/Bruno S. Frey: Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale – Benno Torgler: Tax Morale in Central and Eastern European Countries – Stanisław Owsiak: Taxes in Post-Communist Countries - Old and New Challenges – Gerald M. Easter: Taxation and State Re-Formation in Russia: Policy, Capacity, Compliance – Béla Janky: Social Structure, Transition, and Public Attitudes towards Tax Evasion in Hungary – Katarina Ott: What do State Capacity and Trust Have to Do with the Evolution of the Informal Economy and Tax Evasion in Croatia? – Gabriel Bădescu: Trust, Corruption and Tax Evasion in Romania – Jan Hanousek/Filip Palda: The Evolution of Tax Evasion in the Czech Republic: A Markov Chain Analysis – David Tumanyan: Tax Administration and Evasion in Armenia.