Analysis of the Tax Compliance in the EU: VECM and SEM

Tax compliance is an important indicator for the proper functioning of tax authority, influencing budget revenue level. In this study, a Vector Error Correction Model (VECM) analysis was developed to identify long-term relationships between in individual income taxation (taxpayer’s behavior), public trust politicians (trust authorities), and rule law (power using unbalanced panel data European Union (EU28) during 2007–2017 period. The results underline causality long-run variables. VECM need various support measures voluntary compliance, with variable having impact on compliance. addition, Structural Equation Modeling (SEM) employed improved set variables such as corporation wastefulness government spending, quality education system. SEM positive significant influences