|
on Informal and Underground Economics |
| By: | James Alm (Tulane University) |
| Abstract: | Tax reform and tax administration are closely linked. However, these links are not always fully discussed, fully analyzed, or even fully appreciated. In this paper, I discuss the links between tax administration reform and tax reform. I begin by discussing some basic aspects of tax administration, which suggest three "paradigms" for tax administration that emerge from the theoretical and empirical literature on what motivates individuals to pay -- or not to pay -- their taxes. I then summarize the main reasons why countries reform their tax systems and when these reforms are most likely to be successful and even to occur. This then leads to a detailed discussion of the central role of tax administration reform in tax reform, including an examination of the role of new technologies in tax administration. My main conclusions are twofold. First, a successful reform of a country's tax system requires also a concomitant and concurrent successful reform of a country's tax administration. Second, successful tax administration reform needs to go well beyond changes in enforcement policies alone. |
| Keywords: | Tax reform; tax administration; tax compliance; services; trust |
| JEL: | H20 H26 H60 H83 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2602 |
| By: | Souleymane Faye (EU Tax Observatory); Sarah Godar (EU Tax Observatory, DIW Berlin); Carolina Moura (EU Tax Observatory); Gabriel Zucman (Paris School of Economics, Berkeley, EU Tax Observatory) |
| Abstract: | This paper constructs homogeneous time series of global household offshore wealth covering the 2001–2023 period, during which major international efforts were implemented to curb offshore tax evasion. We find that: (i) global offshore wealth remained broadly stable as a fraction of global GDP since 2001, following a sharp increase in the 1980s and 1990s; (ii) the location of offshore wealth changed markedly, with a decline in the share held in Switzerland and a rise of Asian financial centers, the United Kingdom, and the United States; and (iii) a growing fraction comes from developing countries. |
| Keywords: | Tax havens, Tax evasion, Wealth, International investment positions |
| JEL: | H26 H87 E21 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:041 |
| By: | Abhinav Khemka; Claudia Serra-Sala |
| Abstract: | We investigate how political corruption affects citizens' willingness to disclose tax evasion. We conducted a survey experiment with 1, 200 respondents in Bangalore, India, combining corruption vignettes and list experiments. Respondents were randomly presented with hypothetical candidates whose attributes varied along three dimensions: (a) alleged honesty versus corruption; (b) prioritization of infrastructure versus other public spending; and (c) political party affiliation. |
| Keywords: | Corruption, Tax evasion, List experiment, India, Voting behaviour |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-114 |
| By: | David Henning; Christos Kotsogiannis; Jukka Pirttilä; Luca Salvadori |
| Abstract: | Making use of a rich administrative dataset on Ugandan firms' tax filings covering the period 2013-21, this paper investigates the impact of tax audits on voluntary compliance, contrasting the effect of one vs multiple audits. Using a matched difference-in-differences approach with similar unaudited firms as controls, and a stacked design to address staggered treatment timing, the analysis shows that among firms that consistently file taxes over the study period, audits induce higher value added tax (VAT) liabilities. |
| Keywords: | Taxation, Audits, Tax evasion, Tax administration, Tax compliance |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-110 |
| By: | Brun Lidia (European Commission - JRC); Speitmann Raffael (European Commission - JRC); Stasio Andrzej Leszek (European Commission - JRC); Stoehlker Daniel (European Commission - JRC) |
| Abstract: | This paper examines the Corporate Income Tax (CIT) compliance gap, the difference between revenue due under full compliance and actual collections, across 23 EU Member States, Norway, and Iceland. Existing bottom-up and top-down estimation methods each face notable limitations: Bottom-up approaches are data-intensive and hard to harmonise, while top-down methods depend on uncertain adjustments for undeclared activity and cannot adequately capture multinational profit shifting. An implementation of the IMF RA-GAP top-down method in Spain illustrates these challenges, revealing substantial data needs, conceptual mismatches between national accounts and tax data, and reliance on unverifiable assumptions. To address these issues, the Joint Research Centre proposes a simplified top-down methodology based on Eurostat s exhaustiveness adjustments. This approach is transparent, reproducible, and feasible with data already reported by Member States. Applying it across countries reveals large variation in CIT gaps ranging from below 3% in high-compliance jurisdictions to above 20 35% in others with an unweighted average gap of 10.9% (around EUR 38 billion in 2017). Sectoral patterns consistently show higher gaps in informal, cash-intensive industries and lower gaps in regulated sectors. The paper concludes that while no single method captures all dimensions of non-compliance, the proposed approach offers a practical tool for regular EU-wide monitoring. Its effectiveness depends on the timely and harmonised publication of exhaustiveness adjustment data to support consistent CIT gap estimation and policy analysis. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202507 |
| By: | Rexer, Jonah Matthew; Sharma, Siddharth |
| Abstract: | How do climate shocks shape resource allocation across firms? Rising temperatures might worsen allocative efficiency if large, productive firms face constraints in adapting. This paper assesses this question in India, an economy characterized by informality, misallocation, and extreme heat. The paper uses census data on 42 million non-farm establishments from 1990 to 2013 linked to granular climate histories to estimate the impact of heat on the firm size distribution. A 1 degree Celsius temperature shock reduces firm size by 11.6 percent, with losses concentrated among large, formal firms. Displaced workers reallocate to smaller, informal firms, generating allocative efficiency losses of up to 4.3 percent. In long difference estimates spanning several decades, the relationship reverses: large firms adapt and absorb labor, while small firms contract. This adaptation offsets nearly 60 percent of the short-run labor demand shock. These results highlight a general mechanism of climate adjustment: in the short run, shocks exacerbate misallocation by pushing labor into low-productivity firms, but in the long run, adaptation by larger firms restores efficiency. |
| Date: | 2026–01–08 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11284 |
| By: | Amin, Mohammad; Islam, Asif Mohammed; Padhi, Debasmita |
| Abstract: | The business practices of unregistered or informal enterprises can significantly affect their performance and the overall productivity of the sector. However, very little is known about the prevalence of business practices and the sorts of factors that influence their adoption among informal enterprises. This is especially the case in the context of fragile economies. The present paper attempts to fill this gap in the literature by analyzing the adoption of business practices among informal enterprises in the Central African Republic, which serves as a unique context – high informality, low education attainment, and recurrent shocks including conflict and the AIDS epidemic. While several factors correlated with the decision to adopt business practices are uncovered, the focus is on the education level of the business owner or manager. A conservative estimate suggests that relative to no education or up to primary education, secondary or higher education increases the likelihood of adopting one or more of the nine business practices considered by about 10 percentage points. The number of business practices adopted increases by 0.66 (against a mean value of 1.7). The paper shows that the positive impact of education is most likely causal using entropy balancing, inverse probability weighting, the Oster test for selection on observables, and the impact of the AIDS epidemic in the latter half of the 1990s on school enrollment as an instrument for the education level of current business owners. The analysis also finds significant heterogeneities in the relationship between education and business practices. Belonging to a business association and a business owner’s past experience in the industry may compensate for a lack of formal education, while the use of electricity, manufacturing versus services activity, and location in Bangui city versus Berberati complement and magnify the positive effect of education. The paper discusses several avenues for future research. |
| Date: | 2026–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11280 |
| By: | Younes Elmaatani (USMS - Université Sultan Moulay Slimane); Mohamed Atik |
| Abstract: | This study examines the determinants of tax compliance among local taxpayers in the context of the city of Khouribga, with a particular focus on the role of institutional and psychological dimensions in the relationship between citizens and the tax administration. It is conducted in a context characterized by weak mobilization of municipalities' own tax resources and a persistent dependence on state transfers, which reinforces the importance of voluntary tax compliance at the local level. This research is based on a questionnaire survey conducted among 205 local taxpayers, and the data were analyzed using multiple linear regression. The results show that tax compliance does not depend solely on coercion or fear of sanctions, but mainly on trust in the tax administration, perceptions of justice and equity, transparency in the management of public resources, access to tax information, and citizen engagement. The more taxpayers perceive the local tax system as legitimate, fair, and transparent, the more likely they are to voluntarily fulfill their tax obligations. Conversely, insufficient communication, public management perceived as opaque or unjust, and a lack of institutional trust weaken adherence to the tax system and encourage non-compliant behaviors. The empirical findings confirm that variables related to institutional legitimacy have a more significant effect on tax compliance than mechanisms of control and sanction. The study thus highlights that good fiscal governance constitutes a key lever for improving local revenue mobilization and establishing a sustainable relationship of trust between the administration and citizens, encouraging local authorities to prioritize tax policies based on transparency, awareness-raising, and citizen participation rather than on administrative coercion alone. |
| Abstract: | Cette étude analyse les déterminants de la conformité fiscale des contribuables locaux dans le contexte de la ville de Khouribga, en mettant l'accent sur le rôle des dimensions institutionnelles et psychologiques dans la relation entre le citoyen et l'administration fiscale. Elle s'inscrit dans un contexte marqué par une faible mobilisation des ressources fiscales propres des communes et une dépendance persistante aux transferts de l'État, ce qui renforce l'importance de la conformité volontaire au niveau local. Cette recherche repose sur une enquête par questionnaire menée auprès de 205 contribuables locaux, dont les données ont été analysées à l'aide d'une régression linéaire multiple. Les résultats montrent que la conformité fiscale ne dépend pas uniquement de la contrainte ou de la crainte des sanctions, mais repose principalement sur la confiance envers l'administration fiscale, la perception de justice et d'équité, la transparence dans la gestion des ressources publiques, l'accès à l'information fiscale et l'engagement citoyen. Plus les contribuables perçoivent le système fiscal local comme légitime, équitable et transparent, plus ils sont enclins à s'acquitter volontairement de leurs obligations fiscales. À l'inverse, une communication insuffisante, une gestion publique perçue comme opaque ou injuste et un déficit de confiance institutionnelle affaiblissent l'adhésion au système fiscal et favorisent les comportements de non-conformité. Les résultats empiriques confirment que les variables liées à la légitimité institutionnelle exercent un effet plus significatif sur la conformité fiscale que les mécanismes de contrôle et de sanction. L'étude souligne ainsi que la bonne gouvernance fiscale constitue un levier essentiel pour améliorer la mobilisation des recettes locales et instaurer une relation de confiance durable entre l'administration et les citoyens, invitant les autorités locales à privilégier des politiques fiscales fondées sur la transparence, la sensibilisation et la participation citoyenne plutôt que sur la seule contrainte administrative. |
| Keywords: | Fiscal Justice, Conformité fiscale Confiance Gouvernance locale Justice fiscale Comportement du contribuable JEL Classification : H26 H71 H73 H83 D73. Type du papier : Recherche empirique Tax Compliance Trust Local Governance Fiscal Justice Taxpayer Behavior Classification JEL : H26 H71 H73 H83 D73, Conformité fiscale, Confiance, D73, Taxpayer Behavior Classification JEL : H26, Gouvernance locale, Local Governance, Trust, D73. Type du papier : Recherche empirique Tax Compliance, H83, H73, H71, Comportement du contribuable JEL Classification : H26, Justice fiscale |
| Date: | 2026–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05437615 |