The determinants of compliance with environmental tax: Behavioural study motivated by the case of Indonesia

Deden Dinar Iskandar, Anik Bhaduri and Tobias Wunscher

African Journal of Agricultural and Resource Economics, 2016, vol. 11, issue 01, 14

Abstract: Motivated by the case of Indonesia, this behavioural study applies theoretical and experimental approaches to observe the determinants of compliance with environmental tax. The study is expected to contribute to the environmental policy literature by examining the impact of financial reward and bribery in combination, beside other conventional enforcement factors such as tax rate, audits and fines. While theoretical analysis finds that compliance will decrease with tax rate and increase with audit, fine, financial reward and the price of a bribe, the results of the experiment indicate that the impact of each factor varies according to the presence of bribery. Despite the differences, both approaches show that bribery encourages evasion as the tax rate increases and curbs the positive impact of financial reward in enhancing compliance.

Keywords: Environmental Economics and Policy; International Development (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:afjare:233847

DOI: 10.22004/ag.econ.233847

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