Title Using MIMIC models to examine determinants of VAT gap in Lithuania /
Authors Kasnauskienė, Gindrutė ; Krimisieraitė, Jolita
DOI 10.15388/omee.2015.6.1.14230
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Is Part of Organizations and markets in emerging economies.. Vilnius : Vilniaus universiteto leidykla. 2015, Vol. 6, no. 1, p. 107-126.. ISSN 2029-4581
Keywords [eng] VAT gap ; VAT revenue ; Tax evasion ; MIMIC
Abstract [eng] In recent years analysis of economic loss a!ributed to di\"erent aspects of shadow economy has a!racted much a!ention of both academics and policy makers. Recent statistical data shows that new member states have on average a 9 percent higher VAT gap than the older members of the European Union. Knowing that economies of emerging markets rely on the VAT for a substantially higher percentage of their government revenues, it is very important to understand the determinants limiting revenue mobilization in those countries. In Lithuania, the VAT gap increased dramatically a#er the crisis of 2008 , and now is one of the largest in the EU. However, few studies have empirically tested some hypotheses about the VAT as a revenue-raising instrument in the country. $e purpose of this study is to identify the determinants signi%cantly in&uencing the size of the VAT gap in Lithuania using the MIMIC method for quarterly data of the period 2000-2013. $e applied MIMIC model indicated that two factors (General government consumption expenditure and in&ation) have a statistically signi%cant impact on the VAT gap in the long-run. $e results of the eMIMIC model show that two determinants (in&ation and household deposits) have a statistically signi%cant in&uence on the gap in the short-run. $e authors believe that the key %ndings of the study can be used as one of the supporting tools in adjusting Lithuanian pro-growth tax policy and improving administration of VAT taxes.
Published Vilnius : Vilniaus universiteto leidykla
Type Journal article
Language English
Publication date 2015
CC license CC license description