Increasing the efficiency of the 'Studi di Settore' might backfire

Carla Marchese () and Fabio Privileggi

P.O.L.I.S. department's Working Papers from Department of Public Policy and Public Choice - POLIS

Abstract: The Studi di Settore are used by the Italian tax administration to calculate reference revenue levels for small businesses. Recently new rules have been introduced in order to render the Studi di Settore more efficient in producing realistic estimates, with the aim of reducing the "legalized evasion" that might arise in case of a systematic downward bias. Voices of the involved categories, however, convinced the Government to partially step back. Building upon the standard firm's tax evasion model of Cowell (2003) and the approach of Santoro (2006) we show that, under given conditions, an efficiency increase might backfire implying a larger overall tax evasion and a smaller tax revenue.

JEL-codes: H25 H26 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2007-07
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