PUBLIC TRANSACTION COSTS OF THE TAX SYSTEM

The paper aims to identify the transaction costs of the tax system and show that these costs can be used as an additional criterion of tax system assessment. The author uses an institutional analysis method and hypothesizes that the transaction costs of a tax system are not homogenous and that they include both indispensable and undesirable expenses. The former are required for the operation of institutions, while the latter result from political decisions that seek to use taxes for non-fiscal purposes; such decisions stem from the poor quality and unreliability of state institutions, the author says. Any form of state aid requires additional efforts from fiscal and supervisory authorities and adjustment from taxpayers, Zbroiliska says. Zbroiliska examines the budgetary effects of tax breaks as an indirect measure of the tax system's transaction costs. The analysis of empirical data - finance ministry statistics on 2007 income tax returns - shows that the greatest transaction costs are related to the constantly expanding tax breaks for corporate bodies and controversial exemptions for individuals, the author says.