Abstract

The aim of the research is to know the contribution of direct and indirect tax
evasion to the economic variables (tax, the public budget, and the gross
domestic product) in Iraq, and to try to measure the impact of direct and indirect
tax evasion using the ARCH method on the public budget for the period 2010-
2018, because Iraq has witnessed transformations in Its financial and legal
systems, which negatively affected the financial reality.
The research concluded that the public budget in Iraq and its objectives for the
years (2010-2018) passed with clear fluctuations and disparities, through the
effect of tax evasion that reflects the amount of tax revenues collected and the
extent of their contribution to the public budget, as well as that the continuous
amendments in tax laws as a reform part to reduce evasion However, direct and
indirect tax evasion continues to rise.
It was also found that the public revenues and public expenditures included in
the public budget for two different periods, the first time period was (2004-
2009). The amount of tax revenues is almost negligible when compared to oil
revenues, as the growth rate of public revenues reached (10%) and public
expenditures (12%) Either the second period was (2010-2018), as the increase in
public revenues was a noticeable increase compared to the first period, as the
compound growth rate of public revenues was (5%) and public expenditures
(2%). This increase in revenues is due to the increase in oil prices and the
increase in the expansion of economic activities.
The research hypothesis proved that direct and indirect tax evasion has an
impact on the public budget in Iraq.
Among the most important recommendations presented is tight control over
tax departments, whether direct tax departments or indirect tax departments,
fortifying them with advanced computers linked to one of the central authorities
of the state, and transferring the information obtained in the departments and
transmitting it directly to the central authorities monitoring the tax work. Raising
the efficiency of employees in the tax collection department, improving their
capabilities, providing them with adequate information and the required training,
and involving them in training and development courses that help improve tax
revenue.

Key words: (tax evasion, tax reform, public budget)