Tax Avoidance and Fiscal Limits: Optimization of Tax Bur-den on Economy with «Non-observed» Sector

The article deal with problem to optimization of the level of tax burden on economy with «non-observed» sector. The methodology of this study is the concept of the Laffer curve. The main method of investigation is the graphical method.

The article presents different variants of graphical interpretation of the Laffer curve under conditions of «shadowing» the economy, revealing the main regularities, highlighting the «non- observed» sector, as well as reflecting the sensitivity of tax revenues to crisis phenomena.

Authors draw the following main conclusions. First, if the economy is on ascending branch of Laffer curve and at the same time the government doesn't take into account the presence of «non-observed» sector, then an increase in tax rates leads to significantly overstated expected values of tax revenues. Second, if the economy is on descending branch of Laffer curve, then an increase in the tax burden has a deterrent effect on tax revenues - economic effects of tax policy would create an incentive to drop employment and production in the official sector, increase tax evasion. Thirdly, the economy without tax compliance problems is much more sensitive to economic crises than the economy with the illegal sector.

Thus, underestimation of «non-observed» sector of economy and neglect of the effects of income from tax avoidance call into the question the correctness of current fiscal policy.

The obtained results can be used to model the dependence of tax revenues and output on tax burden in economy with «non-observed» sector and to develop a sound fiscal policy.