Rule of Law, Corruption, and Tax Revenue Performance

Danijela Miloshoska – University St Kliment Ohridski Bitola, Faculty of Tourism and Hospitality-Ohrid, Kej Makedonija, 95, 6000, Ohrid, Republic of North Macedonia

Abstract: Tax revenue refers to the income generated by governments and serves as a critical funding source for public services, infrastructure development, and social welfare programs. While effective legal frameworks and enforcement mechanisms facilitate tax compliance, corruption undermines tax collection efforts, erodes public trust, and distorts economic activity. This study examines the relationship between the rule of law, corruption, and tax revenue performance in North Macedonia. Comparative analyses of the World Bank Governance Indicators – Rule of Law Index and Control of Corruption Index were conducted among countries in the Western Balkan region. Secondary data from the World Bank were utilized, and multiple regression analysis was conducted to determine the impact of the Rule of Law index and Corruption index on tax revenue performance for North Macedonia. Findings indicate weak governance performance related to the rule of law and control of corruption across the Western Balkan region, with the index for all countries below 0. In North Macedonia specifically, findings indicate that approximately 50.7% of the variability in tax revenue can be explained by the rule of law and control of corruption indices. The correlation coefficient of 0,71, suggests a strong positive correlation between tax revenue (% of GDP) and the Rule of Law and Control of Corruption. These findings underscore the significance of addressing corruption and strengthening the rule of law to enhance tax revenue performance.

10th International Scientific Conference ERAZ 2024 – Conference Proceedings: KNOWLEDGE BASED SUSTAINABLE DEVELOPMENT,  hybrid – online, virtually and in person, Lisbon, Portugal, June 6, 2024

ERAZ Conference Proceedings published by: Association of Economists and Managers of the Balkans – Belgrade, Serbia

ERAZ conference partners: Faculty of Logistics, University of Maribor, Maribor (Slovenia); University of National and World Economy – UNWE, Sofia (Bulgaria); Center for Political Research and Documentation (KEPET), Research Laboratory of the Department of Political Science of University of Crete (Greece); Institute of Public Finance – Zagreb (Croatia); Faculty of Tourism and Hospitality Ohrid, University of St. Kliment Ohridski from Bitola (North Macedonia)

ERAZ Conference 2024 Conference Proceedings: ISBN 978-86-80194-86-8, ISSN 2683-5568,

DOI: https://doi.org/10.31410/ERAZ.2024

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-Non-Commercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission. 

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