Tax evasion, corruption and COVID-19 health risk exposure: a cross country analysis

Ahmed Emadeldin Yamen

Journal of Financial Crime, 2021, vol. 28, issue 4, 995-1007

Abstract: Purpose - The purpose of this study is to examine the relationship between tax evasion and COVID-19 public health risk exposure in both high-corruption countries and low-corruption countries. Design/methodology/approach - This study uses cross-sectional data from 138 countries. Tax evasion is measured using the shadow economy size (light intensity approach) as calculated by (Medina and Schneider, 2018). The SolAbility COVID-19 public health risk exposure index (CPHRE) is used to measure COVID-19 health risk. Also, the corruption perception index from transparency international is used for measuring the level of corruption. Findings - This study finds that the level of tax evasion is positively related to CPHRE. Also, the results revealed a positive relationship between corruption and CPHRE. Furthermore, this study examined the moderation effect of corruption. The results indicate that the positive relationship between tax evasion and public health risk exposure is significant in low-corruption countries, but it is insignificant in high-corruption countries. These results imply that the severity of corruption can increase COVID-19 health risk exposure more than tax evasion. Practical implications - Our findings are alerting the policymakers for the negative noneconomic consequences of tax evasion and corruption. It provides evidence that tax evasion and corruption can increase CPHRE. Originality/value - According to the author’s knowledge, this is the first study that examines the relationship between tax evasion and COVID-19 risk and that tests the moderation effect of corruption.

Keywords: Corruption; Tax evasion; COVID-19 risk (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-10-2020-0220

DOI: 10.1108/JFC-10-2020-0220

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