Tax Evasion in Small and Micro Greek Firms in the Light of the Economic Recession

Reducing tax evasion has been among the top priorities of the Greek public administration especially during the last years of the economic recession. The purpose of this study is to examine the level of tax evasion of Greek small and micro firms and how it is affected by the inefficiency of the Public Administration, the negative economic environment and various negative psychological factors. We examine different economic sectors but focus on the retail sale of goods and services. The research hypotheses, regarding the relationship between tax evasion and the above factors are tested through a multiple linear regression model developed for this study. Factor analysis was used to construct the variables used in our model. Our results show that tax evasion is positively affected by the inefficiency of public administration in determining the appropriate rate of tax, in simplifying the complexity of laws and establishing an effective justice system. Finally, the hypothesis regarding the relationship between tax evasion and economic factors is rejected while the hypothesis regarding the relationship between tax evasion and psychological factors is marginally accepted.