|
on Informal and Underground Economics |
| By: | James Alm (Tulane University) |
| Abstract: | Ensuring compliance with the tax laws is an enduring challenge for all governments, and government strategies are constantly evolving as circumstances change. Recently, countries around the world have experienced some major shocks, shocks that are already affecting tax compliance and the policies that governments utilize to maintain compliance. In this paper I examine the effects of two especially important shocks -- technological shocks and SARS-CoV-2 pandemic shocks -- on tax compliance in the years ahead. I argue first that many of these changes in technology will improve the ability of governments to improve tax compliance, mainly by increasing the flow of information to governments, while at the same time opening up new avenues by which some individuals and some firms can evade (and avoid) taxes. I then argue that the pandemic and the associated policies enacted by governments will affect compliance in uncertain ways, in large part because of the conflicting effects of the pandemic and government policies on trust in government. At this point it is unclear which of these trends will dominate, so that the effects of technology and the pandemic on the overall level of tax compliance in a post-pandemic world are uncertain. Even so, I believe that the distributional effects of these shocks are more predictable. Indeed, I argue that these two shocks -- especially the technological shocks -- seem virtually certain to increase economic inequality, regardless of their actual impacts on the level of tax compliance. The challenge facing governments is devising policies to counter these trends. |
| Keywords: | Tax compliance, technology, digitalization, trust, inequality, technology |
| JEL: | H26 H22 D63 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2404&r=iue |
| By: | Chiara Canta (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Helmuth Cremer (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Firouz Gahvari (UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System) |
| Abstract: | We study optimal income taxation in a two-group framework where the private cost of misreporting income is positively correlated with productivity. We show that, if high-wage types always reveal their income truthfully, letting low-wage types cheat would lead to Pareto-superior outcomes regardless of the audit costs (as compared to deterring them). When there is no cheating, redistribution takes place on first- or second-best frontiers with the low-wage types always ending up worse off than the high-wage types. Letting low-wage types conceal their income reduces the need to recourse to second-best mechanisms for redistribution. Additionally, it increases the reach of first-best redistribution to outcomes at which low-wage types are better off than high-wage types. |
| Keywords: | Optimal taxation, tax evasion, audits, welfare-improving |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04457538&r=iue |
| By: | Joshua Aslett; Gustavo González; Stuart Hamilton; Miguel Pecho |
| Abstract: | This technical note introduces analytics for compliance risk management in tax administration. Together with its accompanying toolkit, the note is intended as a starter kit to support capacity development in compliance planning, risk, and intelligence groups. Developed primarily for emerging analysts new to tax administration, the note presents both theory and practical aspects of analytics. Its toolkit is comprised of an initial collection of analytics templates designed to assist in turning the theory presented into practice in the areas of: (1) compliance planning; (2) taxpayer profiling; and (3) audit case selection. |
| Keywords: | tax administration; compliance risk management; compliance strategy; risk analysis; intelligence; data; analytics; digitalization; information technology; analytics support compliance risk management; support CRM analytics capability; CRM theory; IMF Library; data quality; Tax administration core functions; Machine learning; Value-added tax |
| Date: | 2024–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imftnm:2024/001&r=iue |
| By: | Rajesh Raj Natarajan; Kunal Sen |
| Abstract: | The documented under-representation of marginalized groups in business ownership and the labour market is a concerning issue. This study explores how caste disparities in small-firm entrepreneurship impact on firm performance in India, focusing on the informal sector. Our examination shows a significant productivity gap between firms owned by disadvantaged castes and others, including Other Backward Classes and Forward Castes, across the productivity distribution. |
| Keywords: | Caste, Productivity gap, Informal sector, Firms, Discrimination, India |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-4&r=iue |
| By: | Natt Hongdilokkul; Archawa Paweenawat; Krislert Samphantharak; Suparit Suwanik |
| Abstract: | This paper investigates the impacts and implications of a supply-side intervention of black market transactions using a natural experiment from lottery markets in Thailand. Between June 2003 and November 2006, the Thai government imposed a crackdown on the black-market lottery while introducing a new lottery with similar characteristics as a substitute. Using panel data of Thai households, we find that the intervention was effective in eliminating the black-market lottery. Household spending on the black-market lottery dropped sharply after June 2003 and increased again after November 2006. The substitution from the black-market lottery to the government lottery in 2003 was small, while the reverse substitution in 2006 was large. We also find that gambling was habitual and the intervention that breaks the habit had a long-term impact on gambling behavior, i.e., a persistent decrease in expenditures on both illegal and legal lotteries. |
| Keywords: | Household finance; Gambling; Black market; Addiction |
| JEL: | D14 G51 O17 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:pui:dpaper:218&r=iue |