Cash Thresholds, Cash Expenditure and Tax Evasion

Francesco Flaviano Russo (francescoflaviano.russo@unina.it)
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Francesco Flaviano Russo: Università di Napoli Federico II and CSEF

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: I investigate whether cash thresholds that forbid cash payments on big transactions are effective at reducing tax evasion. I find that the 1000 euros threshold implemented in Italy in 2011 induced a bigger cash expenditure reduction for the households with self employed members, and the more so in case they work in cash intensive sectors. With the help of a simple model, I show that this empirical evidence suggests a tax evasion reduction, and I compute the tax revenue increase implied by the empirical estimates. Calibrating the model, I also perform a counterfactual exercise to quantify the potential effects of lower thresholds.

Keywords: Self-employed; Transactions; Payments (search for similar items in EconPapers)
JEL-codes: E42 H26 (search for similar items in EconPapers)
Date: 2020-09-18
New Economics Papers: this item is included in nep-eur, nep-iue, nep-mac, nep-pay, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:579

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