ABSTRACT
Tax erosion and poor revenue mobilisation have been features of many TEs since the start of transition. The SBC that enterprises often face manifests itself, through the tax system, in the form of arrears, exemptions, deferrals and offsets. Another feature of the tax system in TEs that hinders revenue collection, both from lossmaking (the SBC syndrome) and profit-making firms alike, is a poor and ineffective tax administration. Weaknesses in tax administration (and in a broader sense, fiscal institutions) during transition are hardly surprising given the inevitable change from the pre-transition revenue administration system that depended on the state monobank as the main fiscal agent, a small number of compliant taxpayers (namely enterprises) and, in effect, one large public sector to a Western-style tax administration system where confrontation and non-compliance are not uncommon, multiple payment systems prevail, millions of taxpayers exist (often very small, the majority in the private sector) and there is a proliferation of taxes (often leading to a dispersion of administrative resources).
