AN ATTEMPT TO CONSTRUCT FISCAL ILLUSION INDEX FOR TURKISH ECONOMY

WOS: 000410450800001Fiscal Illusion deals with the issue of tax payers' perceptions devoted to the size of the public sector and tax revenues to finance public expenditures. Due to the factors as complexity of tax system, tax rates, governments preference between debt finance or increasing money supply instead of taxation, the share of indirect taxes in tax revenues, lack of confidence to government policy, etc. tax payers can underestimate the level of real tax burden and the size of the public sector. In this study we will evaluate the theoretical development, different approaches and evidences of empirical studies about fiscal illusion. On the basis of these information, we will assess fiscal illusion level of Turkish Economy by employing Factor Analysis as a Multivariate Statistical Method