The Quality of Tax Administration, Macroeconomic Stability and Economic Growth: Assessment and Interaction

Abstract

The article deals with investigating the link between the quality of tax administration, macroeconomic stability and economic growth. The paper identifies the benefits and risks of the shadow operations for macroeconomic stability of the country. Based on the analysis of indicators of the effectiveness of tax policy implementation, an approach to assessing the quality of tax administration of the country was proposed. Based on empirical calculations, a conclusion about the low quality of tax policy in the country was made. The study of the relationship between the quality of tax administration and macroeconomic stability is based on the modified least squares method. The EU countries and Ukraine are identified as the statistical base of the study and the assessment period is 2005–2019. The results of modelling on the example of Ukraine and EU countries proved the relationship between the quality of tax administration of the country and level of its macroeconomic stability and shadow economy. All indices are statistically significant at the level of 1% and 5% and 10% respectively. This research let the authors conclude that it is necessary to take into account the quality of tax administration in forecasting the level of shadow economy and economic growth.