nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2015‒09‒11
eight papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Tax evasion as a determinant of corruption: a game-theoretical analysis By Sokolovska, Olena; Sokolovskyi, Dmytro
  2. A Self-Funding Reward Mechanism for Tax Compliance By Enrique Fatas; Daniele Nosenzo; Martin Sefton; Daniel John Zizzo
  3. South Africa: Technical Assistance Report-Revenue Administration Gap Analysis Program—The Value-Added Tax Gap By International Monetary Fund. Fiscal Affairs Dept.
  4. VAT efficiency in the countries worldwide By Sokolovska, Olena; Sokolovskyi, Dmytro
  5. Republic of Poland: Technical Assistance Report-Tax Administration-Modernization Challenges and Strategic Priorities By International Monetary Fund. Fiscal Affairs Dept.
  6. An Exploratory Analysis of the Effects of the Formalisation Policy for Individual Micro-entrepreneurs By Carlos Henrique L. Corseuil; Marcelo Neri; Gabriel Ulyssea
  7. Are African Households Heterogeneous Agents?: Stylized Facts on Patterns of Consumption, Employment, Income and Earnings for Macroeconomic Modelers By Louise Fox
  8. Liquidity Constraints, Informal Financing, and Entrepreneurship: Direct and Indirect Effects of a Cash Transfer Programme By Rafael P. Ribas

  1. By: Sokolovska, Olena; Sokolovskyi, Dmytro
    Abstract: We consider a static non-cooperative game theoretic model of tax evasion. Some concepts concerned with strategies of interaction between economic agents are formalized in order to determine further possible presence of corrupt practices.
    Keywords: tax evasion, game theory, corruption, behavior
    JEL: C70 D73 H26
    Date: 2015
  2. By: Enrique Fatas (Department of Economics, University of East Anglia); Daniele Nosenzo (Department of Economics, University of Nottingham); Martin Sefton (Department of Economics, University of Nottingham); Daniel John Zizzo (BENC and Newcastle University Business School, Newcastle University)
    Abstract: We compare in a laboratory experiment two audit-based tax compliance mechanisms that collect fines from those found non-compliant. The mechanisms differ in the way fines are redistributed to individuals who were either not audited or audited and found to be compliant. The first, as is the case in most extant tax systems, does not discriminate between the un-audited and those found compliant. The second targets the redistribution in favor of those found compliant. We find that targeting increases compliance when paying taxes generates a social return. We do not find any increase in compliance in a control treatment where individuals audited and found compliant receive symbolic rewards. It is not the mere assigning of rewards, but the material incentives inherent in the rewards that improve compliance. We conclude that existing tax mechanisms have room for improvement by rewarding financially those audited and found compliant.
    Keywords: tax evasion, rewards, audits
    Date: 2015
  3. By: International Monetary Fund. Fiscal Affairs Dept.
    Abstract: This Technical Assistance Report discusses the results of applying the value-added tax (VAT) gap estimation methodology of the Revenue Administration Gap Analysis Program (RA-GAP) to South Africa for the period 2007–12. It is found that the compliance gap is estimated to be between 5 percent and 10 percent of potential VAT revenues during the period 2007–12, and peaking in 2008 and 2009. The estimated compliance gap for VAT in South Africa between 2007 and 2012 is hump-shaped. The results also reveal that the level of the VAT policy gap in South Africa is low by international standards, owing to its simple VAT policy structure.
    Keywords: South Africa;revenues, tax, compliance gap, revenue, capital formation
    Date: 2015–07–10
  4. By: Sokolovska, Olena; Sokolovskyi, Dmytro
    Abstract: The article aims to estimate the efficiency of value-added tax (VAT) collection in the countries worldwide. In a large part of developing and transition countries VAT performs primarily fiscal function, being the main source of budget revenue (for example in 2014 in Ukraine the revenue obtained from VAT was 51% of total tax revenue, in Moldova it achieved 58,2%). At the same time the shadow economy particularly in form of corruption and tax evasion that exists in these countries leads to a considerable tax gap which in turns reduces VAT efficiency. So, the present study intends to define the VAT efficiency ratio in countries of the world. Preliminary theoretical and methodological analysis allowed us to use for calculations a modification of widespread formula, considering in a certain way a tax evasion process. We investigated the dependence between VAT efficiency ratio and size of shadow sector and level of corruption in countries. This research will allow further investigation of the strategies for establishing of optimal VAT rates depending on efficiency of its levying and size of taxpayers which in turns will contribute to raising efficiency of VAT administration, to the reduction of shadow sector and to the economic growth.
    Keywords: VAT, efficiency, shadow sector, corruption
    JEL: C10 D73 E26 H21
    Date: 2015
  5. By: International Monetary Fund. Fiscal Affairs Dept.
    Abstract: This Technical Assistance Report provides advice on the modernization of the tax administration in Poland. Tax collections in Poland as a percentage of GDP are lower than those found in larger European Union member states. The report discusses collection performance of the main taxes in recent years and the approach to tax administration modernization. It also addresses selected issues concerning the tax administration institutional reform; the administration and delivery of core tax administration operations, including for the largest taxpayers; and the approach to managing compliance risks to the tax system.
    Keywords: Poland;tax, tax administration, taxpayers, taxes, tax offices
    Date: 2015–05–04
  6. By: Carlos Henrique L. Corseuil (IPC-IG); Marcelo Neri (IPC-IG); Gabriel Ulyssea (IPC-IG)
    Abstract: Most businesses in Brazil are informal: about 75 per cent of entrepreneurs are not registered with the federal tax authorities (do not hold a Cadastro Nacional de Pessoa Jurídica–CNPJ) and do not contribute to the social security system. This feature is even more pronounced among micro-entrepreneurs who employ up to one employee, who account for about a quarter of the total working population and 89 per cent of entrepreneurs in Brazil.
    Keywords: Exploratory Analysis, Effects, Formalisation Policy, Individual Micro-entrepreneurs
    Date: 2014–09
  7. By: Louise Fox
    Abstract: This paper reviews the evidence on how households in Sub-Saharan Africa segment along consumption, income and earning dimensions relevant for quantitative macroeconomic policy models which incorporate heterogeneity. Key findings include the importance of home-grown food in the income and consumption of house-holds well up the income distribution, the lack of formal financial inclusion for all but the richest households, and the importance of non-wage income. These stylized facts suggest that an externally-generated macroeconomic shock and the short-term policy response would mainly affect the behavior and welfare of these richer urban households, who are also more likely to have the means to cope. Middle class and poor households, especially in rural areas, should be insulated from these external shocks but vulnerable to a wide range of structural factors in the economy as well as idiosyncratic shocks.
    Keywords: Econometric models;Djibouti;Congo, Democratic Republic of the;Congo, Republic of;Comoros;Central African Republic;Chad;Algeria;Angola;Burkina Faso;Burundi;Benin;Botswana;Business cycles;Cameroon;Employment;Ethiopia;Eritrea;Equatorial Guinea;Egypt;Rwanda;Seychelles;Senegal;Sierra Leone;Somalia;South Africa;South Sudan;Ghana;Gambia, The;Gabon;Guinea-Bissau;Guinea;Income distribution;Income inequality;Household consumption;Mali;Mauritania;Mauritius;Nigeria;Niger;Morocco;Mozambique;Namibia;Kenya;Lesotho;Liberia;Libyan Arab Jamahiriya;Madagascar;Malawi;Sub-Saharan Africa;Sudan;Swaziland;Tanzania;Togo;Uganda;Tunisia;Zimbabwe;Zambia;Inequality, macroeconomics, household heterogeneity, Macro Models, Macroeconomic Stabalization, Labor Economics, Informal Labor Market, Mobility, income, poor, poor households, savings, Personal Income and Wealth Distribution, General, Labor Economics: General, Macroeconomic Analyses of Economic Development, Fiscal and Monetary Policy in Development,
    Date: 2015–05–06
  8. By: Rafael P. Ribas (IPC-IG)
    Abstract: "This paper exploits a liquidity shock from a large-scale welfare programme in Brazil to investigate the importance of credit constraints and informal financial assistance in explaining entrepreneurship. Previous research focuses exclusively on how liquidity shocks change recipients behaviour through direct effects on reducing financial constraints. However, the shock may also produce spillovers from recipients to others through private transfers and thereby indirectly affect decisions to be an entrepreneur. This paper presents a method for decomposing the liquidity shock into direct effects associated with relieving financial constraints, and indirect effects associated with spillovers to other individuals. Results suggest that the programme, which assists 20 per cent of Brazilian households, has increased the number of small entrepreneurs by 10 per cent. However, this increase is almost entirely driven by the indirect effect, which is related to an increase in private transfers among poor households. Thus the creation of small businesses tends to be more responsive to the opportunity cost of mutual assistance between households than to financial constraints."(...)
    Keywords: Liquidity Constraints, Informal Financing, Entrepreneurship, Cash Transfer Programme
    Date: 2014–11

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