The paper estimates the income tax gap (individual and corporate) for 1995 to 1997 using the gap approach. It shows that as a percent of potential tax revenue, the estimated income tax gap for compensation income from 1995 to 1997 stood at 16.3%, 10.6% and 7.5%, respectively. On the other hand, the gap for business income for the same period stood at 84%-87% of the potential tax revenues, while that of corporations, 27.5%-29.8%. These indicate that the sizable magnitude of the evaded amounts clearly signal that reforms are needed in the enforcement of the individual and corporate income taxes in order to enhance their revenue productivity.
