The Relationship Between Tax Pressure and Economic Crime

Abstract

Economic crimes such as financial fraud, money laundering and illegal lending are considerably influenced by the tax evasion phenomenon. In the context of Romania, characterized by a vast underground economy and tax evasion, these phenomena contribute directly to the perpetuation of economic crime. Tax evasion is a behaviour of taxpayers consisting in avoiding tax obligations by violating tax legislation. This behaviour includes ignoring mandatory tax rules, falsifying documents or providing incomplete and inaccurate data. Among the factors that can influence tax evasion are tax knowledge, tax morality, the taxation system, the perception of tax fairness and the cost of tax compliance. This study aims to identify the influence that tax pressure has on compliance and the factors that generate economic crime, thus providing useful information for academia, specialists in the field and those responsible for formulating tax policies. It is observed that an increase in tax pressure increases the likelihood that individuals will opt for tax evasion and fraud. That is why efforts to combat tax evasion must be integrated into the fight against illegal credit, money laundering and financial fraud. Thus, an effective government strategy in combating economic crime must include not only sanction-based measures, but also improved tax auditing activity, along with the promotion of spontaneous and responsible tax compliance.

Keywords

• economic crime
• tax pressure
• forensic accounting
• shadow economy
• tax evasion