EU Commission Calls for Better Tax Gap Analysis to Boost Revenue

Estimating the amount of taxable income lost through error or fraud is key to assessing how well EU tax systems ensure compliance and promote fairness, according to a report by the European Commission.

In its Annual Review of Taxation, the commission said improved analysis of the so-called tax gap helps policy makers understand the scope of problems related to tax collection and tax policy design.

Fifteen member states estimate tax gaps for at least some tax types, but there are big differences in what tax agencies measure—and how, according to the report.

Understanding the tax gap is particularly important ...