nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒07‒13
four papers chosen by

  1. Enablers of the Neo-Liberal State? Exploring the Role of the International Accounting-Consulting Firms in Australia Since the Mid-1980s By Howard, Michael
  2. How Do Taxpayers Respond to Public Disclosure and Social Recognition Programs? Evidence from Pakistan By Slemrod, Joel; Ur Rehman, Obeid; Waseem, Mazhar
  3. Estimating the Corporate Income Tax Gap; The RA-GAP Methodology By Junji Ueda
  4. Modernizing the European VAT By Sijbren Cnossen

  1. By: Howard, Michael (The University of Newcastle, School of Humanities and Social Science)
    Abstract: This Discussion Paper is part of a wider contemporary history project examining the growth and role of the commercial consultancy and contractor market within the public sector in Australia since the neo-liberal turn in the mid-1980s. The paper considers evidence as to whether the role of the big international accounting firms within the public sector was ‘neo-liberal’ in nature, either as a result of ideological and policy advocacy or technical facilitation of pre-set neo-liberal directions. The extent to which these firms (currently PwC, KPMG, EY and Deloitte) are seen as integrated or fragmented organisations has some bearing on this question. Hence, the first quarter of the paper sketches the historical broadening-out of the firms from accounting to a wider range of services, the debate over whether they have functioned as global corporations or networked partnerships, the rationalisation of the leading firms over the past three decades and the relatively sparse commentary from political scientists about the significance of the firms and other commercial consultants for public policy and administration in Australia. The second quarter of the paper points to the role of the firms in regard to two markers of a neo-liberal policy direction: privatisation of government business enterprises and particular tax policies and practices. Drawing on qualitative sources, it argues that while the firms made some contribution to the agenda-setting process in both areas, in tacitly (privatisation) or explicitly (taxation) signalling their broad policy preferences, they played a more fundamental role in detailed policy formulation and implementation – in easing the path of privatisation and corporate tax minimisation. The second half of the paper summarises original research by the author in regard to official public listings of consultancies and contracts at the national government level. This quantitative analysis yields important findings: that overall spending on the firms displayed a long-term, consistent and strong increase, both in absolute terms and relative to other consultancies and contractors; that this spending went far beyond accounting and auditing to many areas of management, though with financial analysis likely to underpin management inputs; and that a good deal of this work appeared to be oriented to program content and policy-relevant tasks. otwithstanding these findings, the paper emphasises that the extent to which this work confirmed to neo-liberal markers – such as support for private modes of provision and greater competition – cannot be readily confirmed, due to limitations in the official summary data. Such confirmation can only be achieved by qualitative case studies.The paper acknowledges that, as the firms have broadened their personnel and services over the three decades, much of the management and technology work of the firms in the public sector is unlikely to be intrinsically neo-liberal but potentially compatible with other philosophies of the public sector. Nonetheless, the growing presence of the firms within the public sector does erode notions of public sector capability and distinctive ethos. The paper concludes with a brief pointer to how the foregoing discussion, and further research, can be related to the academic literature on the differing roles played by commercial consultants in relation to clients, ranging from legitimation and facilitation of client preferences through to independent advice and learning.
    Keywords: Auditing; Accounting; Privatisation; Taxation; Consultants; Contracting-out; Policy; Management
    JEL: M40 L84 L33 H20 H26 D73
    Date: 2019
  2. By: Slemrod, Joel; Ur Rehman, Obeid; Waseem, Mazhar
    Abstract: We examine two Pakistani programs to see if the public disclosure of tax information and social recognition of top taxpayers promote tax compliance. Pakistan began revealing income tax paid by every taxpayer in the country from 2012. Simultaneously, another program began recognizing and rewarding the top 100 tax paying corporations, partnerships, self-employed individuals, and wage-earners. We find that both programs induced strong compliance responses. The public disclosure caused on average a 9 log-points increase in the tax paid by individuals exposed to the program. The increase was even larger for the social recognition program, around 17 log-points. Our results suggest that such programs can be important policy levers to mobilize resources, especially in weak-enforcement-capacity economies.
    Keywords: tax evasion
    JEL: H24
    Date: 2020–03
  3. By: Junji Ueda
    Abstract: The IMF Fiscal Affairs Department's Revenue Administration Gap Analysis Program (RA-GAP) aims to provide a quantitative analysis of the tax gap between potential revenues and actual collections, and this technical note explains the concept of the tax gap for corporate income tax (CIT), and the methodology to estimate CIT gaps. It includes detailed steps to derive the potential CIT base and liability with careful consideration for the theoretical differences between the coverage of statistical macroeconomic data and the actual tax base of CIT, and then compare the estimated results with actual declarations and revenues. Although the estimated gaps following the approach will have margins of errors, it has the advantage of using available data without additional costs of collection and suits initial evaluations of overall CIT noncompliance in a country.
    Keywords: Corporate income taxes;Revenue administration;Tax compliance;Tax evasion;Tax Gap, Corporate Income Tax, General, Business Taxes and Subsidies
    Date: 2018–09–12
  4. By: Sijbren Cnossen
    Abstract: The harmonized European value-added tax (VAT) is anything but a modern consumption tax that taxes all goods and services at a uniform rate. As exemplified by an analysis of the Dutch version, some 60% of the base is exempted, that is, not taxed on output but on inputs. This has serious consequences. The VAT exemptions distort input choices, stimulate uneconomical self-supply, and complicate administration and compliance. The welfare costs of the exemptions can be estimated at one half of one percent of gross domestic product (GDP). Research shows that under an equal yield assumption, the elimination of the exemptions and the introduction of a single rate in conjunction with a reduction in the standard rate should foster economic growth. The Member States of the European Union (EU) should be allowed to replace their defective VATs with a modern version. This would strengthen competitive conditions.
    Keywords: VAT, European Union, exemptions, tax reform, C-efficiency
    JEL: H25 H70
    Date: 2020

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.