Tax Gap

The tax gap refers to the difference between the total amount of taxes owed by individuals and businesses and what is actually paid to the government. This gap arises due to various reasons, including underreporting income, tax evasion, and errors in filing. It represents lost revenue that could be used for public services and programs. Understanding the tax gap is important for improving tax compliance and ensuring that everyone contributes their fair share to support society. Efforts to reduce the tax gap involve enhancing enforcement, simplifying tax codes, and increasing public awareness about tax responsibilities.