Excise Duty Gap on Cigarettes
Keywords:Excise duty, revenues, tax gap, illicit market, customs authorities, top-down methodology
AbstractThere are significant loses in tax revenues from illegal trade of such goods as cigarettes due to the fact they are taxed with a very high excise duty burden and therefore there is a very high level of smuggling and illegal trade in alll European Union member states. Increase in the excise duty followed by the price growth has created a fertile ground for expansion of cigarette smuggling on the eastern boarders of the European Union. The authors have designed a methodology how to estimate the excise duty gap on cigarettes. The objective of this article is to present on overview study of tax gap estimations, calculate the excsie duty gap on cigarettes in Latvia, discuss the best practice how to limit the tax gap and protect the legal market, as well as develop recommendations for improvement of tax administration. The problem of protecting the legal market by stoppage and reduction of cigarettes smuggling is on the agenda of the European Union.
THE ECONOMIC CONDITIONS OF ENTERPRISE FUNCTIONING