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on Informal and Underground Economics |
| By: | James Alm (Tulane University); Lilith Burgstaller (University of Freiburg, Walter Eucken Institute); Arrita Domi (Walter Eucken Institute); Amanda März (Walter Eucken Institute); Matthias Kasper (Walter Eucken Institute) |
| Abstract: | This paper discusses current developments in tax compliance research, with a focus on three aspects. First, we summarize empirical evidence on the traditional deterrence or enforcement approach, suggesting that tax audits and fines for noncompliance are critical in taxpayersâ compliance decisions. However, recent research indicates that the effects of deterrence are more nuanced than initially thought, suggesting that other interventions are needed to improve tax compliance. Second, therefore, we discuss research on behavioral approaches to increase tax compliance, starting with research that analyzes the effects of "nudges", or interventions that use behavioral economics to alter the ways in which the choice architecture facing individuals is communicated to them by the tax administration. As applied to tax compliance, we conclude that nudges have had mixed effects on increasing tax compliance, suggesting that the specific design and implementation of these interventions determines their effectiveness. Third, we extend our discussion to other behavioral economics interventions that have not yet been studied widely in tax compliance research. These include "sludge", or institutional features that complicate compliance, and "boosts", or initiatives that target individualsâ competences and thereby help them to make better decisions. Our central argument is that all three of these behavioral interventions should be utilized in the design of tax policies. However, for these methods to effectively complement traditional deterrence approaches, tax administrations should evaluate them before implementing them in the field. Closer cooperation between administrators and academics should thus be facilitated and encouraged. |
| Keywords: | Tax compliance, deterrence theory, behavioral economics, nudges, boosts, sludge |
| JEL: | H2 H26 D91 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2308&r=iue |
| By: | Nguyen Thi, Hoang Ha |
| JEL: | H26 J12 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc23:277651&r=iue |
| By: | Clement Anne; Cyril Chalendard; Ana Fernandes; Bob Rijkers; Vincent Vicard; Ana Margarida Fernandes |
| Abstract: | To identify transactions at risk of tariff evasion, this paper matches export transaction data from France with import transaction data from Madagascar using container identifiers. Reporting discrepancies between exporters and importers are prevalent but small, with over two-fifths of importers reporting in a way that increases their tariff liability. Yet, aggregate tariff revenues are 24 percent lower due to discrepancies. These revenue losses are highly concentrated: the top five evaders account for three-quarters of all tariff revenue losses and larger shipments are more at risk of evasion. Tariff enforcement in Madagascar is ineffective and only marginally mitigates revenue losses. |
| Keywords: | tax evasion, mirror statistics, trade, corruption, exporters, importers, tariffs |
| JEL: | F13 D73 H26 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10795&r=iue |
| By: | Youssef Benzarti; Luisa Wallossek |
| Abstract: | This paper provides novel estimates on the cost of filing taxes over time and in different countries. First, we ran a survey of US taxpayers. We find that taxpayers perceive that tax complexity and filing costs have been increasing and that the majority would be willing to pay for simplifying the tax system and adopting pre-populated tax returns. Second, we use word counts of the tax codes in several countries dating as far back as the early 1980’s as a proxy for tax compliance costs. This measure shows that compliance costs have been steadily increasing. |
| JEL: | H0 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31944&r=iue |
| By: | Chernyakova, Elena (Чернякова, Елена) (The Russian Presidential Academy of National Economy and Public Administration); Yastrebova, Ekaterina (Ястребова, Екатерина) (The Russian Presidential Academy of National Economy and Public Administration); Aslapovskaya, Lyubov (Аслаповская, Любовь) (The Russian Presidential Academy of National Economy and Public Administration) |
| Abstract: | Deepening digitalization leads to increasing involvement of people in pastimes and activities on various platforms, and, accordingly, a significant increase in the income of individuals from YouTube (YouTube), VK, and other similar sources of income through subscriptions, donations, advertising, etc. The changes that began in Russia in the spring of 2022, changes in the composition of digital income sources (change in the number of foreign sources, reorientation to Asian platforms, and the growth in the number of popular Russian platforms), do not change the essence of the situation with the need to control digital income. The coronavirus pandemic has changed many areas of life and the activities of individuals, companies, and countries. It should be noted that the coronavirus pandemic, in which people were in self-isolation, and some people lost their jobs, also contributed to a significant increase in income from the respective platforms. Another modern trend is the widespread use of self-employed regimes in the economy, the work of people outside labor contracts. The use of these regimes not only simplifies the involvement of individuals in legal business activities but also provides additional opportunities for tax evasion. The most striking example is the Uber case in the UK. The expansion of the use of cryptocurrencies and the beginning of the actual taxation of income from cryptocurrencies is also another modern trend. All the above trends indicate the relevance of the work and require detailed analysis, based on the results of which it is advisable to adjust the tax legislation of Russia. The subject of the study is the income of individuals received from sources that exist in digital form. The main goal of the study is to modernize some aspects of the current system of taxation of individuals to ensure the rights of citizens of the Russian Federation and the fiscal interests of the state. The main tasks to be solved within the framework of the study: an overview of the main modern changes in the world and Russia that affect or may affect the taxation of individuals; identification and analysis of modern trends in the taxation of individuals in the world; identification and analysis of additional modern trends in the taxation of individuals, characteristic of Russia; preparation of proposals for improving the taxation of individuals in Russia. Research methods - a set of general scientific and special methods of cognition, namely, system analysis, the method of analogy, and the general logical method of generalization, comparative legal, structural, and functional analysis. The sources of information in the study are research materials of Russian and foreign scientists, legislative bases, websites of tax authorities of the countries of the world, the information presented on the digital platforms themselves, the media, and other sources. The scientific novelty of the study is primarily due to the novelty of the very issue of obtaining significant income for individuals from sources that exist in digital form. In addition, the scientific novelty of the study is due to the analysis of the latest scientific research on this issue, as well as the latest changes in tax legislation and initiatives of the tax authorities of foreign countries on the topic of the study. It should be noted that regulation in the field of cryptocurrencies is only being formed in the world. The result of the work will be the preparation of proposals for improving the legislative framework for taxation and administration of income of individuals in Russia received from sources that exist in digital form. As a result of the analysis of foreign experience, the following conclusions were drawn both at the country level and the OECD level, there is a tendency to involve platforms in the fulfillment of tax obligations by taxpayers when they receive income in digital form. However, the level of platform engagement varies. This is how Youtube withholds tax on the income of individuals at the source, and for example, Twitch and Patreon accumulate information about the income received by individuals and share it with taxpayers and the tax service, leaving the obligation to pay tax for individuals. In terms of advertising, it can be said that there are several options for the interaction of creators with advertising companies, in some cases, such interaction can be qualified as labor activity. Accordingly, the taxation of income received may vary. We point out that from September 1, 2022, amendments to the law on advertising came into force in Russia, which can fill with practical meaning the theoretical possibility of various taxation of income from the interaction of creators with advertising companies. Also interesting is the experience in terms of dividing a person's activities into hobbies and entrepreneurship and, accordingly, the difference in taxation. In terms of cryptocurrencies, the initiatives of Asian countries are primarily interesting. As recommendations, it seems appropriate to consider foreign experience in terms of the taxation of such individuals as bloggers and streamers, and the involvement of digital platforms in the fulfillment by individuals of their tax obligations. In the future, this work can become the basis for work to improve the taxation of the entire system for obtaining relevant income, including not only individuals but also companies. |
| Keywords: | personal income taxes, sharing economy, gig economy, cryptocurrencies, blogger, streamer, social networks, labor relations |
| Date: | 2022–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:w20220283&r=iue |
| By: | Margit Schratzenstaller |
| Abstract: | Wealth inequality and concentration, together with the search for options to secure long-term sufficiency of tax systems in face of ageing societies, have recently moved the taxation of inheritances into the spotlight. The question if and to what extent behavioral responses by bequeathers may undermine the revenue potential of inheritance taxes is central for policy design. This survey of the empirical literature finds an overall moderate impact of inheritance taxation on wealth accumulation and residential choice. This holds true also for the impact of inheritance taxes on tax planning and avoidance in general as well as inter vivos transfers in particular. Tax planning, avoidance and evasion responses are more pronounced than real responses. Behavioral responses to an inheritance tax are smaller compared to a recurrent net wealth tax. Therefore, policymakers aiming at the minimization of (revenue-reducing) behavioral responses should prefer an inheritance tax over a recurrent net wealth tax. Furthermore, the containment of (illegal) tax avoidance should be a priority for policymakers in order to secure legitimacy of and public support for inheritance taxation, but also to ensure that inheritance taxes are an efficient tool to reduce inequality, considering that avoidance and evasion are highly concentrated among the rich. |
| Keywords: | Inheritance taxation, Wealth taxation, Behavioural responses, Tax elasticities, Tax avoidance |
| Date: | 2023–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2023:i:668&r=iue |
| By: | Eko Arief Yogama (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK.); Daniel J. Gray (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK.); Matthew D. Rablen (Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, UK.) |
| Abstract: | We conducted a randomised controlled trial in Indonesia to evaluate the effect of three intervention letters on tax penalty compliance behaviour. Over 10, 000 individual taxpayers are randomly assigned to receive either a deterrence, information, or simplification letter, or no letter. Our results indicate that simplification, which makes paying a penalty less burdensome administratively by providing billing codes to pay the penalties, yields the highest probability of timely settlement, increasing compliance by 32 per cent compared to the control group. Deterrence also positively impacts penalty compliance, increasing timely settlement rates by 27 per cent. The least effective intervention is the information letter. Although associated with a 12 per cent increase in tax compliance, this effect is only statistically significant at the 10 per cent confidence level. Our results suggest that strategic messaging by tax authorities in developing countries can be a cost-effective tool for improving tax penalty payment compliance. |
| Keywords: | Tax penalties; Tax compliance; RCT; Simplification; Deterrence; Information; Indonesia |
| JEL: | C93 D91 H26 Z18 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2023023&r=iue |
| By: | Douglas Gollin; Joseph P. Kaboski |
| Abstract: | This paper describes an emerging literature in economics that aims to merge macro issues of structural change and growth with micro data and analysis. This literature focuses on a set of related patterns of change that accompany the processes of growth and development. Traditionally, the focus has been on industrialization – and more broadly the reallocation of employment and economic activity from agriculture to manufacturing and services. The new literature considers a broader set of transformations: from rural to urban, from home to market (and from market to home), from informal to formal, and from self-employment to wage work. Drawing on new data sources, including micro data and administrative records, the literature tries to understand the complex interactions of a broad set of market failures, policy distortions, and impediments to the growth process. In broadening the understanding of structural transformation – to encompass processes beyond industrialization – this literature opens the door to a richer understanding of the processes of growth and a wider set of potential levers for policy. |
| JEL: | O1 O4 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31905&r=iue |
| By: | Goerke, Laszlo (IAAEU, University of Trier); Pannenberg, Markus (Bielefeld University of Applied Sciences) |
| Abstract: | We analyse in what way co-determination affects non-compliance with the German minimum wage, which was introduced in 2015. The Works Constitution Act (WCA), the law regulating co-determination at the plant level, provides works councils with indirect means to ensure compliance with the statutory minimum wage. Based on this legal situation, our theoretical model predicts that non-compliance is less likely in co-determined firms because works councils enhance the enforcement of the law. The economic correlates of co-determination, such as higher productivity and wages, affect non-compliance in opposite directions. The empirical analysis, using data from the German Socio-economic Panel (SOEP) for the years 2016 and 2019, demonstrates that non-compliance occurs less often for employees in co-determined establishments, while there is no impact on the difference between the minimum wage and the amount, which was actually paid. Therefore, co-determination helps to secure the payment of minimum wages. |
| Keywords: | co-determination, labour law, minimum wages, Socio-economic Panel (SOEP), non-compliance, works councils |
| JEL: | J30 J53 K31 K42 M54 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16621&r=iue |
| By: | Blagica Petreski; Ada Huibregtse; Aleksandar Ristovski |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ftm:policy:2023-12/49&r=iue |
| By: | Charif Akachkach (UIT - Université Ibn Tofaïl); Bensbahou Aziz (UIT - Université Ibn Tofaïl) |
| Abstract: | Abstract: The purpose of this article is to highlight the importance of the non-observed economy "NOE" in the Moroccan socio-political context. Our constructivist approach based on the inductive approach, allowed us to describe and analyze the characteristics of the compound NOE; mainly the informal economy, the shadow economy, the criminal economy and the domestic economy. Its contribution to national wealth far exceeds 40% of GDP, with employment participation exceeding 67% of total employment. The study also shows that the growth of non-formal activities is the legitimate result of the politico-institutional conditions that frame the country's mode of governance, as well as the structure of the local political economy. Keywords : informal economy, underground economy, Criminal economy, Domestic economy, Moroccan political economy. |
| Abstract: | Résumé : Le but de cet article est de mettre en évidence l'importance de l'économie non observée « ENO » dans le contexte socio-politique marocain. Notre démarche constructiviste basée sur l'approche inductive, nous a permis de décrire et d'analyser les caractéristiques de l'ENO composée ; essentiellement de l'économie informelle, l'économie souterraine, l'économie criminelle et l'économie domestique. Sa contribution à la richesse nationale dépasse largement 40% du PIB, avec une participation à l'emploi qui dépasse 67% de l'emploi total. L'étude montre aussi que la croissance des activités non formelle est le résultat légitime des conditions politico-institutionnelles qui encadrent le mode de gouvernance du pays, ainsi que de la structure de l'économie politique locale. Mots clés : économie informelle, économie souterraine, économie criminelle, économie domestique, économie politique marocaine. |
| Keywords: | économie politique marocaine., African Scientific Journal, économie informelle, économie souterraine, économie criminelle, économie domestique |
| Date: | 2023–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04289592&r=iue |
| By: | Blanco Valeria; Cristina Daniela; Navarrete José Luis; Figueras Alberto José |
| Abstract: | El presente trabajo se focaliza en contrastar la hipótesis de convergencia de salarios en Argentina entre los años 2004-2020, centrando el análisis en los mercados laborales formales e informales. Se utiliza el concepto de convergencia beta, que se basa en la relación entre la tasa de crecimiento de los salarios y su nivel inicial. Se plantea la hipótesis que el mercado laboral informal es más flexible que el mercado laboral formal, lo que implica que los salarios en el mercado laboral informal estarían influenciados principalmente por condiciones específicas de cada provincia, mientras que, en el caso formal, factores como la negociación colectiva y otras rigideces determinarían la evolución salarial. |
| JEL: | J01 J21 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:aep:anales:4626&r=iue |
| By: | Caullo María Laura; Capello Marcelo; Chincarini María Azul; Aguirre Joaquín |
| Abstract: | Entender los determinantes de la participación laboral femenina en Argentina requiere conocer los incentivos que enfrentan las mujeres a la hora de decidir si entrar o no en el mercado de trabajo. Usando como punto de partida el modelo TaxBEN de la OECD, simulamos una serie de escenarios para un abanico de ‘familias tipo’ con el objetivo de capturar el efecto que tiene sobre los ingresos de las familias la entrada al mercado laboral de la mujer, considerando que esa modificación tiene consecuencias sobre los ingresos laborales y no laborales (asistencia del Estado), sobre la presión impositiva y sobre el costo asociado al cuidado de los niños. De esta forma se logra apreciar bajo qué supuestos la mujer puede encontrarse incentivada a trabajar de manera informal, o directamente a no trabajar. Encontramos que los costos asociados a entrar al mercado laboral son mayores para las madres solteras, y más significativos cuando la mujer se incorpora a un trabajo registrado. |
| JEL: | J16 J3 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:aep:anales:4632&r=iue |
| By: | Miller, Ben (CDA Collaborative Learning); Rettberg, Angelika (Universidad de los Andes) |
| Abstract: | Este artículo examina el impacto del complejo entorno de Medellín, una ciudad de 2, 5 millones de habitantes, en las pequeñas y medianas empresas (PYMEs) locales, donde coexisten la actividad económica formal e informal, así como actores legales e ilegales. Aunque las PYMEs superan en número a las grandes empresas, operan a una escala menor y presentan características organizacionales más informales y menos prominentes en el ámbito público. La necesidad de responder colectivamente a la violencia es crucial para estas empresas, pero la organización de acciones conjuntas puede ser un desafío. Con base en una revisión de los documentos oficiales, bibliografía académica, visitas de campo y 39 entrevistas, desarrollamos una tipología de tres partes sobre las respuestas de las PYME ante los actores violentos: aquiescencia, elusión y mitigación. El estudio propone que la mayoría de las PYMEs en Medellín se han adaptado a las complejidades de la legalidad, ilegalidad, formalidad y violencia, empleando estrategias como aquiescencia, elusión y mitigación frente a actores violentos. Se destaca que aunque la cooperación con actores ilegales puede garantizar la viabilidad a corto plazo, plantea desafíos a largo plazo para el empoderamiento, fortalecimiento institucional y desarrollo económico inclusivo de las comunidades. En última instancia, el artículo sugiere que algunas estrategias de las PYME son más efectivas que otras para su supervivencia y crecimiento en entornos violentos. |
| Keywords: | Medellín; PYME; violencia urbana; extorsión; criminalidad |
| JEL: | K14 K40 R00 |
| Date: | 2023–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:020999&r=iue |