A Primer on Tax Evasion

Tanzi, Vito; Shome, Parthasarathi

doi:10.2307/3867611

Cited by 94 publications

(41 citation statements)

References 14 publications

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“…This erosion of the tax base has several detrimental fiscal effects. The consequences of lost revenue to the funding of public services are of special concern (Tanzi, 2000a). In addition, corruption and tax evasion may have harmful effects on economic efficiency in general (Chand and Moene, 1999;Tanzi, 2000b) and income distribution in particular (Slemrod and Bakija, 1998;Hindriks et al, 1999).…”

Section: Introductionmentioning

confidence: 99%

Fighting fiscal corruption: lessons from the Tanzania Revenue Authority

Fjeldstad

2003

Public Admin & Development

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SUMMARYOver the last decade, several African countries have undertaken comprehensive reforms of their tax administrations to increase revenue and curb corruption. This article examines recent experiences in the fight against corruption in the Tanzania Revenue Authority (TRA). Two lessons of broader relevance are highlighted. Firstly, even with relatively high wages and good working conditions, corruption may continue to thrive. In a situation where there is high demand for corrupt services, it is unrealistic to provide tax officers with pay rates that can compensate for the amount gained through bribery. Without extensive and effective monitoring, wage increases may produce not only a highly paid, but also a highly corrupt tax administration. Secondly, hiring and firing procedures may lead to more corruption. Corrupt tax officers often operate in networks, which also include external actors. These corruption networks seem to have been strengthened because many of those fired were recruited to the private sector as 'tax experts'. This partly explains why the positive process experienced in the initial phase of the new revenue authority was later reversed.

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Section: Introductionmentioning

confidence: 99%

Fighting fiscal corruption: lessons from the Tanzania Revenue Authority

Fjeldstad

2003

Public Admin & Development

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“…This is the case, e.g., in the fiscal and insurance domain, where an adequately targeted audit strategy is a key success factor for governments and insurance companies. In fact, huge amounts of frauded resources may be recovered in principle from well-targeted audits: for instance, the form of tax evasion consisting in filing fraudulent tax declarations in Italy is estimated between 3% and 10% of GNP [19]. This explains the increasing interest and investments of governments and insurance companies in intelligent systems for audit planning.…”

Section: Introductionmentioning

confidence: 99%

A classification-based methodology for planning audit strategies in fraud detection

Bonchi

Giannotti

Mainetto

et al. 1999

Proceedings of the Fifth ACM SIGKDD International Conference on Knowledge Discovery and Data Mining

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Planning adequate audit strategies is a key success factor in a posterion' fraud detection, e.g., in the fiscal and insurance domains, where audits are intended to detect tax evasion and fraudulent claims. A case study is presented in this paper, which illustrates how techniques based on classification can be used to support the task of planning audit strategies. The proposed approach is sensible to some conflicting issues of audit planning, e.g., the trade-off between maximizing audit benefits vs. minimizing audit costs. A methodological scenario, common to a whole class of similar applications, is then abstracted away from the case study. The limitations of available systems to support the identified overall KDD process, bring us to point out the key aspects of a logic-based database language, integrated with mining mechanisms, which is used to provide a uniform, highly expressive environment for the various steps in the construction of the considered case-study. KeywordsKnowledge discovery in databases, data mining, classification, decision trees, fraud detection, logic-based database languages, integration of querying and mining.

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“…Still though with respect to tax evasion there is some evidence that in the Western developed countries the rates of tax evasion are estimated around 5%-25% of potential tax revenue (Feige (1989), Pyle (1989) and Thomas (1992)) while for developing countries higher rates may prevail (Tanzi and Shome (1994)). For the year 1988 in the US, the TCMP has estimated that only 53% of the population has paid its taxes correctly.…”

Section: Numerical Approximationsmentioning

confidence: 99%

Corruption and Environmental Policy: An Alternative Perspective

Λαπατίνας¹,

Λίτινα²,

Sartzetakis³

2011

SSRN Journal

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We construct an overlapping generations model in which agents live through two periods; childhood and adulthood. Each agent makes choices only as an adult, based on her utility that depends on her own consumption and the human capital and environmental quality endowed to her offspring. Entering adulthood, agents choose randomly between two occupations: citizens and politicians. Citizens are the only producers of a single good and choose the proportion of their income to declare to the tax authorities. Politicians decide upon the allocation of the tax revenue between environmental protection and education activities, taking as given the rates of peculation in each activity. In this context, two selffulfilling stable equilibria can emerge, one associated with high and another with low corruption. Corrupted politicians induce high levels of tax evasion, reducing total public funds and thus environmental protection activities. This result is in accordance with existing empirical evidence and implies that environmental policies may fail in corrupt countries where they are used as means of supporting rent seeking activities instead of protecting the environment. A higher level political authority could intervene and force the low corruption equilibrium by choosing the appropriate tax rate and, through institutional changes, the rates of peculation. Keywords Department of Economics, University of Macedonia AbstractWe construct an overlapping generations model in which agents live through two periods; childhood and adulthood. Each agent makes choices only as an adult, based on her utility that depends on her own consumption and the human capital and environmental quality endowed to her offspring. Entering adulthood, agents choose randomly between two occupations: citizens and politicians. Citizens are the only producers of a single good and choose the proportion of their income to declare to the tax authorities. Politicians decide upon the allocation of the tax revenue between environmental protection and education activities, taking as given the rates of peculation in each activity. In this context, two self-fulfilling stable equilibria can emerge, one associated with high and another with low corruption. Corrupted politicians induce high levels of tax evasion, reducing total public funds and thus environmental protection activities. This result is in accordance with existing empirical evidence and implies that environmental policies may fail in corrupt countries where they are used as means of supporting rent seeking activities instead of protecting the environment. A higher level political authority could intervene and force the low corruption equilibrium by choosing the appropriate tax rate and, through institutional changes, the rates of peculation.JEL codes: H2, H26, H3, Q56, Q58 * We would like to thank Theodore Palivos for insightful comments.

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A Primer on Tax Evasion

Cited by 94 publications

References 14 publications

Fighting fiscal corruption: lessons from the Tanzania Revenue Authority

Fighting fiscal corruption: lessons from the Tanzania Revenue Authority

A classification-based methodology for planning audit strategies in fraud detection

Corruption and Environmental Policy: An Alternative Perspective

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