The financial and economic crisis continues to weigh heavily on Member States' government revenues. Fiscal consolidation has become more urgent as concerns about sustainability have become more acute and spread to hitherto unaffected countries. The weakening real economy, fragile public finances and the vulnerable financial sector appear to be mutually affecting each other in a vicious circle. Confidence and growth will only return once this negative interaction is interrupted. Following a wide range of tax stimulus measures over the period 2008-10, the focus of tax policy has clearly shifted towards a much needed consolidation of public finances. Several Member States will have to consider increasing tax revenues as a complement to expenditure control to consolidate their public finances. This is particularly relevant for countries that show unsustainable budgetary situations but, at the same time, have room for potential tax revenue increases. In this context good tax governance is more than ever needed. Combating tax fraud and evasion, reducing tax gaps and improving the efficiency of tax collection can play an important role in raising additional revenues.

Keywords Evasion, Reducing Tax Gaps, Additional Revenues.