Empirical evidence on horizontal competition in tax enforcement

Jose M. Duran-Cabre, Alejandro Esteller-Moré () and Luca Salvadori ()
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Alejandro Esteller-Moré: Universitat de Barcelona & IEB

No 2012/5, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Tax auditing parameters have been largely overlooked by the literature as policy-making instruments of any relevance; however, enforcement strategies are critical elements of the tax burden. In this paper we show that, in a federal framework, tax auditing policies can serve as additional tools for regional interaction. We examine the presence of this interaction by adopting a spatial econometric approach. We employ a time-space recursive model that accounts for sluggish adjustment in auditing policies and obtain results that are congruent with standard theory, corroborating the presence of horizontal competition between regions in their tax auditing policies. We also find that once regional governments acquire legal power, the opaque competition in enforcement policies disappears apparently switching to a more transparent competition in statutory tax parameters.

Keywords: Tax administration and auditing; fiscal competition; fiscal federalism (search for similar items in EconPapers)
JEL-codes: H71 H77 H83 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Empirical evidence on horizontal competition in tax enforcement (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2012-5

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