Enlarging the European Union: Taxation and Corruption in the New Member States

This paper addresses the run up to the recent European Union enlargement. It considers the accession of 10 Eastern European countries in view of the pre-existing economic conditions. The paper also raises the question how the new member states can tackle their deficit problems. In particular, the paper pays attention to the question at what point the emphasis should be placed on cutting expenditure rather than raising revenues. Furthermore, the paper addresses tax capacity and tax effort in the new member states. Finally, the paper looks at possible negative relationships between corruption and tax effort on the one hand and corruption and foreign direct investments on the other