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on Public Finance |
| By: | Subhayu Bandyopadhyay; Sugata Marjit; Santiago Pinto; Marcel Thum |
| Abstract: | We investigate the delicate balance policymakers have to strike between raising tax revenues for public good provision and controlling the distortionary effects of taxes on (i) tax evasion, (ii) total work hours, and (iii) the allocation of work hours to illegal activities. These distortions lower the constrained optimal tax rate and result in the under-provision of the public good. This under-provision problem is mitigated when surplus from the audit agency is seamlessly transferred to the taxing authorities. Extensions of the basic model incorporate agent heterogeneity and a more general specification of the concealment cost function for infringements. |
| Keywords: | taxation; evasion; compliance; illicit activities; public goods; externalities |
| JEL: | H2 H4 K10 |
| Date: | 2025–03–19 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:99706 |
| By: | Mr. Irving Aw; Brendan Crowley; Mr. Cory Hillier; Rose A Nyongesa; Ms. Lydia E Sofrona; Mr. Christophe J Waerzeggers |
| Abstract: | Fair and effective tax collection is critical to the success of any tax system in raising revenue and should be properly legislated. Voluntary payment of taxes by taxpayers is always preferred and should be encouraged and supported by the tax procedure legal framework. However, the law should also provide for protective measures to prevent taxpayers from frustrating tax collection efforts by taking either themselves or their assets out of the tax administration’s reach. As a last resort, the tax administration should be able to compel the recovery of outstanding tax debts from taxpayers or certain third parties through different legislative measures. Such powers should however be complemented by adequate safeguards for taxpayers. This note focuses on the key issues that should be taken into consideration in designing tax law provisions to support fair and effective tax collection. |
| Keywords: | Tax Collection; Legislation; Protective Measures; Compelled Recovery; Tax Liens; Installment Arrangements; Crisis Events; clearance mechanism; penalties regime; tax procedure; tax law provision; clearance certificate; tax rulings regime; IT system; Tax administration core functions; Tax arrears management; Tax law; Collateral |
| Date: | 2025–03–18 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imftlt:2025/001 |
| By: | Vanhala, Mikko; Viertola, Marika |
| Abstract: | In this paper, we describe the evolution of effective tax rates (ETR) of Finnish corporate groups and firms over time. Using detailed corporate tax return data from 2000-2015, we document a decreasing time trend in effective tax rates, particularly for Finnish-owned multinational enterprises. We do not observe a significant decreasing trend for domestic firms, consistent with a broad tax base and limited means of tax avoidance. Complementing our results with unconditional quantile regression, we also observe heterogeneity in the time trend across the ETR distribution. Finally, we link multinational enterprises to their foreign subsidiaries and find that multinationals with tax haven subsidiaries report zero taxable profits more often than non-haven affiliated ones. Our results show that the financial crisis had a lasting legacy on Finnish firms, creating large loss carry-forwards that were deduced in the following years. |
| Keywords: | effective tax rate, tax avoidance, corporate taxation, Business taxation and regulation, H25, H26, fi=Verotus|sv=Beskattning|en=Taxation|, |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:174 |