Search results

Tax evasion analysis typically assumes that evasion involves individual taxpayers responding to some given policies. However, evading taxes could require the collaboration of at least two taxpayers. Detection depends on the costly avoidance activities of both transacting partners. An increase in sanctions leads to a direct increase in the expected cost of a transaction in the illegal sector, but it may also increase the incentive for the partners to cooperate in avoiding detection. The total cost of transacting in the illegal sector can fall, and tax evasion may increase. The policy implications of this phenomenon are considered. JEL Classification: H26 L'évasion fiscale collective. Dans les analyses de l'évasion fiscale, on suppose habituellement que le payeur de taxe fait face à un ensemble donné de politiques auxquelles il réagit. Pourtant, dans le cas des transactions marchandes, l'évasion fiscale n'est possible que si plusieurs agents coopèrent ensemble. La probabilité que l'évasion soit détectée dépend alors des efforts que chacun fait pour la cacher. Dans un tel contexte, de plus lourdes sanctions accroissent le coût espéré des transactions illégales, mais peuvent aussi, indirectement, accroître l'incitation pour les partenaires à coopérer pour cacher leur activité illégale. Il en résulte que le coût total des transactions illégales peut diminuer et l'évasion fiscale augmenter. Nous étudions les implications de ce phénomène.

Background and objective Tobacco tax evasion undermines the goal of tobacco taxes as a tobacco control measure to make tobacco products less affordable, increases the health risks for those who smoke and decreases the government revenue. This paper analyses the tobacco tax evasion in six Western Balkan (WB) countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The aim of this research is to estimate the size of the illicit market and identify the main determinants of tax evasion activities in the Southeastern European region. Data and methods Data from 2019 Survey on Tobacco Consumption in Southeastern Europe (STCSEE) are used. STC-SEE provides uniquely comparable nationally representative data on smoking behaviour for adult (18–85 years old) population for each country. Tax evasion is defined on the basis of available information on tax stamps, health warnings, price and the place of purchase, in accordance with the previous research on tax evasion. In order to estimate the determinants of illicit purchases we use binary choice model of tax evasion. Results The study finds that 20.4% of all current smokers in WB countries evade taxes on tobacco products, with evasion being much more frequent for hand-rolled (HR) tobacco (86.7%) than for the manufactured cigarettes (MC) (8.6%). While HR is predominantly illicit in all six countries, MC evasion varies significantly, with evasion being significantly higher in Montenegro and Bosnia and Herzegovina. Results further suggest that tax evasion is higher in the statistical regions where institutional capacities to tackle illicit trade are lower, in municipalities bordering countries with high MC evasion, as well as among smokers with low income, women and elderly. We also provide evidence that higher tobacco taxes and prices do not increase illicit consumption. Conclusion The findings from the research suggest that in order to decrease tax evasion, governments should put additional effort to strengthen institutional capacities to tackle illicit tobacco markets. Furthermore, improving regional coordination in development and implementation of tobacco control policies, including the prevention of illicit market, is essential in lowering evasion in all WB countries. Finally, WB countries should regulate and enforce excise tax stamp requirements on the HR tobacco market to a much higher degree.

In this paper I take a 'public choice' approach to the problem of tax evasion. Moreover, I assume that people will be more willing to pay their taxes when they trust the government more. Thus, we would expect that tax evasion would be lower, ceteris paribus, the more responsive governments are to their citizens' wishes. Finally, since the level of tax evasion depends on the trust of citizens that other citizens pay their taxes, it follows that there are multiple equilibria, which can be broadly classified into two: one in which, broadly speaking, people assume that others are paying and so most of them also pay, and the other in which the opposite is true.

Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01 percent richest households evade about 25 percent of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5 percent throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality. (JEL D31, H24, H26, K34)

AbstractUsing a Cournot oligopoly model with an endogenous number of firms and evasion of indirect taxes, we show that more intense competition may have the negative side effect of increasing tax evasion, thereby, lowering public revenues and welfare. This will be the case if market entry costs decrease. A similar result will hold if marginal production costs fall and demand is either weakly concave, or convex and inelastic. The result of more competition, less evasion and higher public revenues will be obtained if (a) marginal production costs fall and demand is convex and elastic or (b) the demand elasticity increases. As a policy implication, we prove that tax enforcement should be intensified if there is a negative trade‐off between competition and evasion.