Tax rates and tax evasion: an empirical analysis of the long-run aspects in Italy

Bruno Chiarini, Elisabetta Marzano and Friedrich Schneider ()

European Journal of Law and Economics, 2013, vol. 35, issue 2, 273-293

Abstract: We use official time series of the Italian evaded VAT base (Ministry of Finance) for the period 1980:1–2006:4 to investigate empirically the long-run characteristics of tax evasion and the relationship with the tax burden. Three hitherto unexplored issues are addressed. First, using different measures of aggregate economic activity as reference variables in estimating the average tax burden, we examine the size and dynamics of the overburden traceable back to tax evasion. Second, exploiting cointegration techniques, we quantify the elasticity between tax evasion and the average tax rate in Italy. We then comment on the complex dynamic interaction between the tax burden and tax evasion to ascertain whether in the Italian experience there is evidence for any “vicious circle” between them. Copyright Springer Science+Business Media, LLC 2013

Keywords: Tax evasion; VAT evasion; Effective tax rate; Apparent tax rate; VECM; H30; H26; O17; C32 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:ejlwec:v:35:y:2013:i:2:p:273-293

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DOI: 10.1007/s10657-011-9247-6

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