https://doi.org/10.52903/wp2026355
CAN HIGHER EDUCATION LEVELS IMPROVE TAX COMPLIANCE?
Emmanouil Taxiarchis Gazilas
University of Piraeus
Zacharias Bragoudakis
Bank of Greece
ABSTRACT
This paper examines how governance and education affect VAT compliance in 25 EU nations between 2008 and 2022. The dependent variable is the VAT gap, which is the difference between expected and actual VAT revenue. GDP growth is included as a macroeconomic control, and governance metrics like regulatory quality and corruption control are examined alongside education indicators, such as primary, secondary, and tertiary enrollment. The research takes time and country-specific heterogeneity into account using fixed effects panel regression. According to the results, higher levels of education are linked to improved VAT compliance, indicating that education increases civic engagement and tax morale. While higher corruption is associated with increased VAT gaps, stronger regulations also improve compliance. Additionaly, the findings show the way human capital, institutional quality, and economic conditions interact to shape fiscal outcomes. Findings further provide policymakers evidence that integrating social and institutional strategies can increase tax collection and decrease tax evasion.
JEL-classifications: H1, H26, H20, I25, C23
Keywords: Public Finance, VAT Gap, Tax Compliance, Education, Governance, Europe
Disclaimer: The views expressed in this paper are those of the authors and not necessarily those of the Bank of Greece
Corresponding author:
Zacharias Bragoudakis
Economic Analysis and Research Department
Bank of Greece
El.Venizelos 21, 10250 Athens, Greece
Tel.: +30-2103203605
email: zbragoudakis@bankofgreece.gr