Informal economy and tax morale interaction

Informal economy, which has come up since the middle of 20 the century, has gained importance due to the negative effects it has caused both in developing and developed countries. The straggle with the informal economy tried to be managed with the way of increasing the rate of punishment and inspection which are known as the classical approaches. As these methods were not efficient in handing the expected results, the direction was reflected to the approaches including the social-psychological factors. Especially, taxpayer based terms such as tax morale and tax compliance which arose with the restructuring period of revenue departments gave rise to add human factors in determining the rules about the informal economy.In this study, we have focused on the point that whether there is a relationship between tax morale and informal economy. Even though, literature on this topic contains very limited numbers of studies, it has been confirmed that tax morale has an essential role in decreasing the informal economy and the dimension of the informal economy affects the level tax morale. Empirical studies testing the interaction between the informal economy and tax morale has concluded that there is a negative correlation between tax morale and the informal economy.The number of the studies in Turkey which concern on this interaction has increased; but they have not reached the expected level. The rise of empirical studies on this topic will surely light to the relationship between the tax morale and the informal economy and will definitely contribute to the decrease of the rate of the informal economy, which is a critical problem in Turkey.