Voluntary disclosure programmes offer tax evaders the opportunity to come clean with reduced penalties. This column uses data from the US and Germany to examine the merits of such programmes. They are found to increase tax evasion, but also to significantly lower administrative costs, leading to a net increase in tax revenues.
Dominika Langenmayr, Friday, November 13, 2015 - 00:00
Tim Besley, Anders Jensen, Torsten Persson, Thursday, February 12, 2015 - 00:00
Dirk Niepelt, Wednesday, January 21, 2015 - 00:00
Athanasios O. Tagkalakis, Tuesday, December 2, 2014 - 00:00
Charles A.E. Goodhart, Jonathan Ashworth, Wednesday, October 8, 2014 - 00:00
Francesco Pappadà, Yanos Zylberberg, Monday, February 3, 2014 - 00:00
Greece’s austerity package included an unprecedented increase in the VAT rate, but the resulting increase in revenue was much lower than expected. This column links this disappointing result to the ‘transparency response’ of firms to higher tax rates. In countries like Greece with poor tax monitoring, firms face a tradeoff when deciding whether to declare their activity. Transparency is a necessary condition for accessing external finance, but it also means having to pay tax. Improving credit conditions for small and medium-size Greek firms might shift this tradeoff in favour of transparency.
Wojciech Kopczuk, Justin Marion, Erich Muehlegger, Joel Slemrod, Monday, September 30, 2013 - 00:00
Tax evasion and noncompliance reduce government revenue and exacerbate the problem of increasing debt. Standard economic theory predicts that the identity of the tax remitter shouldn’t affect outcomes – but this ignores the possibility of evasion. This column provides evidence that in the presence of evasion, both the amount of revenue collected and the incidence of burden are sensitive to the identity of the remitter. These results should inform future tax reform.
Maurizio Bovi, Friday, December 2, 2011 - 00:00
The countries most affected by the Eurozone debt crisis seem also to be characterised by bad institutions and large shadow economies. This column describes the bad equilibrium in which bad governments offer few and low-quality public services and make people less willing to pay for services. Firms stay underground, public receipts stay low, and governments remain inefficient. In sum, the presence of inept bureaucracy may be strongly associated with the shadow economy.
Thorsten Beck, Chen Lin, Yue Ma, Wednesday, October 13, 2010 - 00:00
Can financial sector reform help bring informal firms into the formal sector? This column examines over 22,000 firms from 43 countries. Firms in countries with a credit registry are 20% less likely to evade taxes, and the tax evasion ratio in such countries is 11% lower.
Maurizio Bovi, Sunday, May 30, 2010 - 00:00
Europe’s highly indebted countries – Portugal, Italy, Ireland, Greece, and Spain – also face the problem of tax evasion. This column analyses how governments can tackle their fiscal deficits while reducing the possibility of forcing activity underground. It suggests that fewer, better paid public workers could complement tax cuts in fighting tax evasion.
Yuriy Gorodnichenko, Jorge Martinez-Vazquez , Klara Sabirianova Peter, Tuesday, February 19, 2008 - 00:00
Russia’s economic and fiscal successes since adopting a flat tax in 2001 have bred enthusiasm for tax reform amongst casual observers. This column summarises research investigating the flat tax’s effects and suggests that many of the gains came from reduced tax evasion in Russia.