TAX EVANSION AND TAX GAP ESTIMATION IN THE EURO AREA THROUGH MONETARY MONEY DEMAND METHOD.

Tax avoidance and tax evasion significantly affect public budget revenues as well as the redistributive goals of the state. The rate of the shadow economy varies across EU Member States. Any attempt to measure this social phenomenon is full of empirical difficulties. By methods to determine the size of the shadow economy we can only estimate the tax gap that quantifies the extent of tax evasion. In this paper we deal with one of the methods of monetary measurement of the tax gap - money demand method. We are analyzing the results achieved for the euro area for the time period 2002 - 2015. From the outputs can be estimated not only the size of the tax gap in the euro area countries, but also we can evaluate the effectiveness of measures and recommendations of the European Commission which are aimed at combating tax evasion and tax fraud. For monitoring the research problems were mainly used methods of observation, comparison, and also mathematical and statistical methods. [ABSTRACT FROM AUTHOR]