Inter-municipal cooperation and tax enforcement capabilities

Naruki Notsu, Haruaki Hirota and Nobuo Akai

Regional Science and Urban Economics, 2025, vol. 114, issue C

Abstract: This study examines the effects of enhancing administrative tax enforcement on the tax gap, focusing on inter-municipal cooperation (IMC). IMC involves collaborative tax collection efforts among multiple municipalities and promotes the aggregation of tax collection resources and expertise, improving tax enforcement. Using the time variation in IMC creation across municipalities, we show that IMC substantially reduces the tax gap by reinforcing tax enforcement in local governments. Our findings suggest that enhanced administrative capability in tax enforcement can be an effective tool against noncompliance in ways other than facilitating voluntary compliance.

Keywords: Inter-municipal cooperation; Tax enforcement; Tax compliance (search for similar items in EconPapers)
JEL-codes: H71 H77 H83 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:114:y:2025:i:c:s0166046225000547

DOI: 10.1016/j.regsciurbeco.2025.104137

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