DOES TAXATION INFLUENCE EFFICIENCY OF PUBLIC SERVICES PROVISION: CASE OF EUROPEAN COUNTRIES
Abstract
Public services are identified as services that provided by the government of certain jurisdiction (country or local community) in order to ensure citizens’ welfare and social protection. Efficiency of public services provision depends on numerous economic, social and institutional factors. In turn, numerous scientific debates are about optimisation of taxation in order to increase efficiency of public goods provision. Therefore, the purpose of the research is to clarify empirically the cohesion between public services provision and taxation for the sample of European countries (Latvia, Lithuania, Estonia, Czech Republic, Germany, Slovak Republic, Hungary, Poland, Romania, Bulgaria, Slovenia, and Ukraine) for 2005-2018. Correlation analysis and panel data regression analysis results allow concluding that provision of public goods (safety, education, health care) highly dependent on social contributions ant taxes on goods and services, and less on taxes on income, profits and capital gains. Moreover, taxes growth dynamics in chosen European countries is twice, triple or even five times more rapid than growth dynamics of all dependent variables (only government expenditures on education and social contributions annual growth rates are almost equal). Such a discrepancy might results in increase of social tensions, shadow economy, intensification of tax avoidances and tax evasion processes, lack of population to government loyalty. All this proves the necessity of improvement of financial resources redistribution in order to improve efficiency of public services provision.
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