Consumers as Tax Auditors

Joana Naritomi

American Economic Review, 2019, vol. 109, issue 9, 3031-72

Abstract: To investigate the enforcement value of third-party information on potentially collusive taxpayers, I study an anti-tax evasion program that rewards consumers for ensuring that firms report sales and establishes a verification system to aid whistle-blowing consumers in Sao Paulo, Brazil (Nota Fiscal Paulista). Firms reported sales increased by at least 21 percent over 4 years. The results are consistent with fixed costs of concealing collusion, increased detection probability from whistle-blower threats, and with behavioral biases associated with lotteries amplifying the enforcement value of the program. Although firms increased reported expenses, tax revenue net of rewards increased by 9.3 percent.

JEL-codes: D22 H25 H26 L25 O14 O17 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20160658
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Citations: View citations in EconPapers (120)

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Working Paper: Consumers as tax auditors (2019)
Working Paper: Consumers as Tax Auditors (2018)
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