FORMALIZATION OF THE CAUSAL RELATIONSHIP BETWEEN TAX GAPS ON INDIVIDUAL INCOME TAX AND MACROECONOMIC STABILITY

Abstract

At the present stage of organizing social and economic relations between economic subjects of different levels, one of the threats to economic security and macroeconomic stability of the country is a high level of shadow economy. In the context of the investigation of the tax channel of shadowing the economy, as one of the most common mechanisms for hiding the income by economic agents, the main catalysts for shadowing are the growth of the tax burden, regulatory pressure and a low level of social security of the population. The increase in the tax burden serves as an impetus for the transition of taxpayers to the shadow at the same speed with which they leave it, with its decrease. These processes stimulate shadow operations in the economy and the growth of funds operating outside the formal sector. The article develops a methodological approach to assessing tax gaps on individual income tax, and provides a comparative analysis of their volumes in the context of Ukraine and European countries. In assessing the tax gaps for individual income tax, it is proposed to consider the size of the average wage per employee employed in the formal sector of the economy. Based on the results of empirical calculations, conclusions about a significant increase in the volume of tax gaps in Ukraine and their significant excess compared to the world average have been made. The causal relationship of tax gaps with the country's GDP is investigated, their negative impact on the level of macroeconomic stability of the country is substantiated. It is concluded that significant volumes of tax evasion reduce the country's GDP and are accompanied by an increase in the level of shadowing of the economy. It is ultimately leads to an increase in the budget deficit. It has been confirmed that a high volume of tax gaps creates preconditions for an increase in the scale of shadow activity, a deterioration in indicators of the country's macroeconomic stability. The necessity of improving and reviewing the tools for the prevention of shadow financial transactions and the formation of tax gaps has been substantiated.