Assessing the effectiveness of tax administration in macroeconomic stability: evidence from 26 European Countries

The purpose of this paper is the assessment and comparative analysis of the relative efficiency of the tax administrations of 26 European countries in 2017, regarding their contribution to macroeconomic stability, the attraction of foreign direct investment and the strengthening of GDP. In particular, by applying the CCR Data Environment Analysis output-oriented model, the measurement of the performance of the tax offices of the European countries under investigation, the assessment of the relative efficiency, the evaluation of results, the identification of fully efficient tax administrations and inefficient ones, in which a real improvement in their efficiency can be achieved, are attempted. Subsequently, for tax administrations that are considered inefficient, a set of possible ways to improve their operation is proposed, through specific changes (slacks) in the input and output levels, which can be implemented to make them more efficient. The results of the analysis also include useful information on the efficiency of tax services, which their administrations should use to change their operating conditions in order to improve their effectiveness. In addition, robustness checks led to useful conclusions about the quality of research results and the important role that specific inputs play in the relative efficiency of the tax administrations of European countries.