nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2021‒11‒15
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Determinants of tax morale: Cross-sectional evidence from Africa By Nyamapheni, Joseph; Robinson, Zurika
  2. Are SMEs Avoiding Compliance Costs? Evidence from VAT Reforms in Japan By SUZUKI Takafumi; KAWAKUBO Takafumi
  3. Quantitative Evaluation of Tax Compliance Cost in Japan (Japanese) By TAKAGI Shunpei; NAKAJIMA Yuka
  4. Using Sparse Modeling to Detect Accounting Fraud (Japanese) By USUKI Teppei; KONDO Satoshi; SHIRAKI Kengo; MASADA Takahiro; SUZAKI Kosuke; MIYAKAWA Daisuke
  5. Flood Disasters and Health Among the Urban Poor By Michelle Escobar Carias; David Johnston; Rachel Knott; Rohan Sweeney

  1. By: Nyamapheni, Joseph; Robinson, Zurika
    Abstract: The article provides a comparative analysis of the determinants of tax morale in South Africa and Zimbabwe, as neighbouring countries. In this quantitative research, data were collected using questionnaires from the 2010?2014 and 2017?2020 World Values Survey. For Zimbabwe, Wave 6 and Wave 7 had a sample size of 1 500 and 1 200, respectively. The study concludes that governments must understand tax morale and its determinants to boost voluntary compliance. Despite their lower standards of living, Zimbabweans have higher tax morale than South Africans. The determinants of tax morale differ between economic situations and countries. Corruption, prevalent in both countries, influences tax morale. All the models show that demographic factors have little effect on tax morale. In the analysis of the determinants of tax morale, hunger was introduced as an important variable. Although this variable was insignificant for South Africa, the study showed that in Zimbabwe, there is a negative relationship between hunger and tax morale in both economic situations. Policy-makers should consider eradicating corruption and hunger to boost tax morale to improve tax compliance. Continued tax education and improvements to the perceptions of democracy should be included in the mix of tax compliance enhancement strategies.
    Keywords: Determinants; Tax morale; Order Logit Model; South Africa; Zimbabwe
    Date: 2021–10
  2. By: SUZUKI Takafumi; KAWAKUBO Takafumi
    Abstract: This study disentangles the motives behind enterprises' responses to size-dependent tax regulations by exploiting value-added tax (VAT) reforms in Japan. Tax threshold and tax rate in Japan have changed over the past three decades since the introduction of VAT. We build on the model of Harju et al. (2019) to incorporate various tax reforms and conducted bunching estimation. By using a novel panel of the Japanese Census of Manufacture covering the periods of VAT introduction and reforms, we find from the local estimates that the observed output response of enterprises is mainly caused by compliance costs rather than tax rates for small enterprises in Japan. The results suggest that the authorities would be better served by easing compliance costs while enhancing tax revenue to improve the efficiency of tax design.
    Date: 2021–11
  3. By: TAKAGI Shunpei; NAKAJIMA Yuka
    Abstract: When considering the impact of taxation on business activities, it is important to consider not only the economic burden of taxation, but also the burden associated with tax procedures such as tax filing. However, the actual conditions of such burdens have not always been sufficiently investigated in Japan. Therefore, with the aim of providing reference material for the design of future tax systems, this paper summarizes the basic facts about the actual situation of the burden of tax procedures (hereinafter referred to as "tax compliance costs") on companies, by utilizing a questionnaire survey of companies. The main results are as follows. (1) Tax compliance costs tend to increase with the size of the company. (2) Despite the higher costs for larger companies, the tax compliance cost as a percentage of sales is larger for smaller companies. As a policy implication, it can be pointed out that the impact of tax procedures on business management is relatively larger for small and medium-sized enterprises (SMEs), and therefore, it is important to consider the practical burden on SMEs when designing the tax reform system.
    Date: 2021–11
  4. By: USUKI Teppei; KONDO Satoshi; SHIRAKI Kengo; MASADA Takahiro; SUZAKI Kosuke; MIYAKAWA Daisuke
    Abstract: In this paper, we implement anomaly detection on listed firms' accounting items. Using a type of sparse modeling, i.e., Graphical Lasso, we confirm that our accounting fraud detection has achieved a practically admissible level of detection capability. We also find that the method of sparse modeling contributes to detection capability.
    Date: 2021–10
  5. By: Michelle Escobar Carias; David Johnston; Rachel Knott; Rohan Sweeney
    Abstract: Billions of people live in urban poverty, with many forced to reside in disaster-prone areas. Research suggests that such disasters harm child nutrition and increase adult morbidity. However, little is known about impacts on mental health, particularly of people living in slums. In this paper we estimate the effects of flood disasters on the mental and physical health of poor adults and children in urban Indonesia. Our data come from the Indonesia Family Life Survey and new surveys of informal settlement residents. We find that urban poor populations experience increases in acute morbidities and depressive symptoms following floods, that the negative mental health effects last longer, and that the urban wealthy show no health effects from flood exposure. Further analysis suggests that worse economic outcomes may be partly responsible. Overall, the results provide a more nuanced understanding of the morbidities experienced by populations most vulnerable to increased disaster occurrence.
    Date: 2021–11

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