nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2017‒04‒16
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Using Internal and External Sources of Information to Reduce Customs Evasion By Cyril Chalendard
  2. Tax simplification and tax efficiency By Nihal Bayraktar
  3. Existing data to measure African trade: By Mitaritonna, Cristina; Traoré, Fousseini
  4. Estimating the effects of the minimum wage in a developing country: A density discontinuity design approach By Jales, Hugo
  5. Fiscalità ideale, legale, reale, percepita By Giuseppe Vitaletti

  1. By: Cyril Chalendard (CERDI - Centre d'études et de recherches sur le developpement international - Université d'Auvergne - Clermont-Ferrand I - Centre National de la Recherche Scientifique)
    Abstract: This paper aims to identify some factors that reduce evasion of customs duties in developing countries. Following the recent literature on customs evasion, we proxy customs fraud by discrepancies in bilateral trade statistics. Estimates first show that the more frequently a product is imported, the more customs fraud reduces. We argue that this result is indicative of the fact that customs officers use what they have learned from similar import declarations - use customs' internal information - to better assess the compliance of declarations. Then, we show that relying on an information provider - a pre-shipment inspection company in our case - seems to increase tax enforcement. Results indicate that pre-shipment inspections significantly reduce observed discrepancies in trade statistics. In line with previous studies, we find that the semi-elasticity of evasion increases with the tax rate. Finally, estimates confirm that enforcement is product-varying. Results are robust to various robustness checks.
    Keywords: Use of internal information,External Information acquisition,Customs enforcement,Tax evasion,Pre-shipment inspections.
    Date: 2017–02–01
  2. By: Nihal Bayraktar
    Abstract: Tax simplification has always been in the agenda of policymakers to increase the efficiency of the tax system and tax compliance burdens for taxpayers. At the same time, less complex tax systems can contribute to higher tax revenues with minimum negative distortions to economies. The link between tax simplification and tax efficiency is especially important for policymakers in the era of high government budget deficits, which require collecting higher tax revenues. In the literature, empirical studies on this link between simpler tax systems and tax efficiency are considerably limited. The aim of this paper is the empirical study of the impact of tax simplification on the efficiency of tax systems in a cross-country setting. Simpler tax laws contribute to more efficient administration with less discretion leading to greater efficiencies in tax collection. Similarly, lower corruption associated with simpler tax systems is also expected to yield higher tax efficiency and revenues. The main statistical tools will be regression analyses in addition to graphical and tabular analyses. In the regression specification, tax efficiency will be a function of tax simplification indicators and control variables. The control variables will be selected from macroeconomic, demographic, or institutional variables which can determine the tax effort of countries. Possible control variables can be trade openness, growth, the size of shadow economy, the quality of governance and institutions, population, and macroeconomic stability. A panel dataset will be used in the paper. Around 100 developed and developing countries from different regions of the world will be included in the study. The dataset will cover the years from 2002 to 2012. Tax efficiency (tax effort) will be introduced using two alternative measures: a traditional regression approach and stochastic frontier analysis. Tax simplification will be measured by Time to Comply and Number of Payments from the Doing Business Indicators Database, and tax corruption will be generated from the Enterprise Surveys Database. We expect that the outcomes of the proposed paper can have useful policy implications. It is expected that tax complexity has important impacts on the efficiency of tax systems of countries, but the empirical evidence on this issue is very limited in the literature. The expected outcomes can place numerical values on the possible impact of tax simplification on effectiveness of tax collection systems.
    Keywords: Around 100 developed and developing countries from different regions of the world will be included in the study., Tax policy, Public finance
    Date: 2016–07–04
  3. By: Mitaritonna, Cristina; Traoré, Fousseini
    Abstract: One finds a broad consensus in the literature regarding the lack of good information on trade in Africa, particularly intraregional trade. This paper attempts to identify gaps and remedies in measuring and tracking trade in Africa. We review the major international and regional databases that track trade in Africa, identifying the gaps therein. We also review the studies that have attempted to track informal trade between African countries, and we look at the major ongoing initiatives to track such informal trade. It appears that both international and regional databases suffer from a lack of reporting or from faulty reporting of African trade statistics. Informal trade flows pose an ongoing problem when measuring intraregional trade, although actual border-monitoring initiatives ongoing in selected countries constitute an interesting option for their quantification. When no direct monitoring method is available, estimating gravity equations represents an alternative with which to measure the potential trade between two partner countries, giving us an estimate of missing trade. A final avenue consists of estimating unregistered trade via national accounts data by comparing consumption, production, and declared trade.
    Keywords: AFRICA, trade; informal sector; production; consumption, trade databases; informal trade; missing trade, F10 Trade: General; F14 Empirical Studies of Trade; F19 Trade: Other,
    Date: 2017
  4. By: Jales, Hugo
    Abstract: This paper proposes a framework to identify the effects of the mini- mum wage on the joint distribution of sector and wage in a developing country. I show how the discontinuity of the wage distribution around the minimum wage identifies the extent of non-compliance with the minimum wage policy, and how the conditional probability of sector given wage recovers the relationship between latent sector and wages. I apply the method in the "PNAD", a nationwide representative Brazilian cross-sectional dataset for the years 2001 to 2009. The results indicate that the size of the informal sector is increased by around 39% compared to what would prevail in the absence of the minimum wage, an effect attributable to (i) unemployment effects of the minimum wage on the formal sector, (ii) movements of workers from the formal to the informal sector as a response to the policy.
    Keywords: Minimum wage,informality,density discontinuity,unemployment
    JEL: J00 J31 J30
    Date: 2017
  5. By: Giuseppe Vitaletti (Università Tuscia)
    Abstract: According to Antonio Pedone, an important problem as regards taxation is the division among an ideal, a legal, an effective, and a perceived fiscal system, with the main difference between the ideal and the legal systems. This difference is very important in Italy: personal taxation is less than half with respect to what is expected. The differences can be explained going back to the tributary reform of the first seventy years of the past century. Here many problems arise, in particular from the attempt to make the tax system formally progressive. First of all the attempt has been a complete failure. Secondly there is the single taxation of interest, and the double taxation on income from firms - direct and through capital gains. Thirdly immigrants have to declare incomes from the real and financial capital of their original countries. Many other problems follow these. If the reform had not touched the imposable base, keeping it national, not only would these problems not have existed, but progressivity could also be substantially much higher than now. To obtain this, in the first place the social contribution has to be made progressive; secondly, only with that base is it possible to reduce rents: interests, extra big firms profits, and others. Even in indirect taxation, a more conservative approach was needed, placing Iva alongside a small purchases tax. It is possible therefore to construct a fiscal system which conjugates the distributive and allocative goals, including the containment of fiscal evasion. In this way the difference between the ideal and legal system would almost disappear.
    Keywords: Personal Taxation, Real Taxation, Social Contributions, Tax Evasion
    JEL: H20 H24 H26

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