TAX ENFORCEMENT USING A HYBRID BETWEEN SELF- AND THIRD-PARTY REPORTING

Sarah Clifford and Panos Mavrokonstantis

No 876, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We study behavioural responses to a widely-used tax enforcement policy that combines ele¬ments of self- and third-party reporting. Taxpayers self-report to the tax authority but must file documentation issued by a third-party to corroborate their claims. Exploiting salary-dependent cutoffs governing documentation requirements when claiming deductions for charitable contribu¬tions in Cyprus, we estimate that deductions increase by £0.7 when taxpayers can claim £1 more without documentation. Second, using a reform that retroactively shifted a threshold activating documentation requirements, we estimate that at least 64% of the response is purely a reporting adjustment. Finally, reporting thresholds affect the responsiveness to tax subsidies.

Keywords: Tax enforcement; Tax compliance; Charitable giving; Tax design (search for similar items in EconPapers)
Date: 2019-08-14
New Economics Papers: this item is included in nep-iue, nep-pbe and nep-pub
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Citations: View citations in EconPapers (3)

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