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on Informal and Underground Economics |
| By: | Michael Keen; Joel Slemrod |
| Abstract: | This paper sets out a framework for analyzing optimal interventions by a tax administration, one that parallels and can be closely integrated with established frameworks for thinking about optimal tax policy. Its key contribution is the development of a summary measure of the impact of administrative interventions—the “enforcement elasticity of tax revenue†—that is a sufficient statistic for the behavioral response to such interventions, much as the elasticity of taxable income serves as a sufficient statistic for the response to tax rates. Amongst the applications are characterizations of the optimal balance between policy and administrative measures, and of the optimal compliance gap. |
| Keywords: | Tax administration;Optimal taxation;Tax elasticity;Tax rates;Tax administration, tax compliance, optimal taxation |
| Date: | 2017–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/8&r=iue |
| By: | Seidel, André; Marjit, Sugata |
| Abstract: | This paper addresses tax loopholes that allow firms to exploit borderline cases between legal tax avoidance and illegal tax evasion. In general, tax loopholes are detrimental for a revenue-maximizing government. This may change in the presence of corruption in the tax administration. Tax loopholes may serve as a separating mechanism that helps governments maximize revenues and curb corruption, which may explain why developing countries only gradually close loopholes in their tax codes. |
| JEL: | H26 D73 D82 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145635&r=iue |
| By: | Bob Rijkers (The World Bank); Leila Baghdadi; Gael Raballand |
| Abstract: | Are politically connected firms more likely to evade taxes? This paper presents evidence suggesting firms owned by President Ben Ali and his family were more prone to evading import tariffs. During Ben Ali’s reign, evasion gaps, defined as the difference between the value of exports to Tunisia reported by partner countries and the value of imports reported at Tunisian customs, were correlated with the import share of connected firms. This association was especially strong for goods subject to high tariffs, and driven by underreporting of unit prices, which diminished after the revolution. Consistent with these product-level patterns, unit prices reported by connected firms were lower than those reported by other firms, and declined faster with tariffs than those of other firms. Moreover, privatization to the Ben Ali family was associated with a reduction in reported unit prices, whereas privatization per se was not. |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:961&r=iue |
| By: | Mar Delgado-Téllez; Victor Duarte Lledo; Javier J. Pérez |
| Abstract: | This paper proposes an empirical framework that distinguishes voluntary from involuntary compliance with fiscal deficit targets on the basis of economic, institutional, and political factors. The framework is applied to Spain’s Autonomous Communities (regions) over the period 2002-2015. Fiscal noncompliance among Spain’s regions has shown to be persistent. It increases with the size of growth forecast errors and the extent to which fiscal targets are tightened, factors not fully under the control of regional governments. Non-compliance also tends to increase during election years, when vertical fiscal imbalances accentuate, and market financing costs subside. Strong fiscal rules have not shown any significant impact in containing fiscal non-compliance. Reducing fiscal non-compliance in multilevel governance systems such as the one in Spain requires a comprehensive assessment of intergovernmental fiscal arrangements that looks beyond rules-based frameworks by ensuring enforcement procedures are politically credible. |
| Keywords: | Fiscal policy;Spain;State taxation;Regional economics;Fiscal compliance, rules, fiscal federalism, soft budget constraints |
| Date: | 2017–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/5&r=iue |
| By: | Ahmed Elsayed; Jackline Wahba (University of Southampton, UK) |
| Abstract: | This paper examines the dynamics of informality and the extent to which informal workers (without job contracts) transit to formal employment (with job contracts) and whether this transition has changed over time and in particular during the recent political and economic turmoil in Egypt. It also investigates the potential gains/losses associated with holding a job contract. Using panel data from Egypt, we find that after the Arab Spring Revolution, the probability to work without a contract increased, and conditional on being informally employed, the probability to switch from private informal to private formal employment decreased. We also find that working without contract is associated with pay penalty. This pay penalty has increased significantly over time. Furthermore, using Difference in difference techniques, the results show that moving from employment without contract to one with contract is associated with a substantial wage premium. |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1001&r=iue |
| By: | Aysit Tansel (Middle East Technical University); Halil Ibrahim Keskin; Zeynel Abidin Ozdemir |
| Abstract: | This paper considers the private sector wage earners in Egypt and examines their wage distribution during 1998-2012 using the Egyptian Labor Market Panel Survey. We first estimate Mincer wage equations both at the mean and at different quantiles of the wage distribution taking into account observable characteristics. Then we make use of the panel feature of the data and estimate models taking into account unobservable characteristics. We also consider the possibility of nonlinearity in covariate effects and estimate a variant of matching models. In all cases we find a persistent informal wage penalty in the face of extensive sensitivity checks. It is smaller when unobserved heterogeneity is taken into account and larger at the top than at the bottom of the conditional wage distribution. We also examine the informal wage penalty over time during the study period and in different groups according to experience and education. The informal wage penalty has increased recently over time and is larger for the better educated but smaller for the more experienced. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:976&r=iue |
| By: | Sami Bensassi (University of Birmingham); Anne Brockmeyer; Mathieu Pellerin; Gaël Raballand |
| Abstract: | This paper estimates the volume of informal trade between Algeria and Mali and analyzes its determinants and mechanisms, using a multi-pronged methodology. First, we discuss how subsidy policies and the legal framework create incentives for informal trade across the Sahara. Second, we provide evidence of the importance of informal trade, drawing on satellite images and surveys with informal traders in Mali and Algeria. We estimate that the weekly turnover of informal trade fell from approximately US$ 2 million in 2011 to US$ 0.74 million in 2014, but continues to play a crucial role in the economies of northern Mali and southern Algeria. We also show that official trade statistics are meaningless in this context, as they capture less than 3% of total trade. Profit margins of 20-30% on informal trade contribute to explaining the relative prosperity of northern Mali. Informal trade probably plays a strong role in poverty reduction, especially in the Kidal region. Finally, we provide qualitative evidence on informal trade actors and the governance and social impacts of informal trade in North Mali and South Algeria. |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:960&r=iue |