Tax revenues, fiscal corruption and "shame" costs

Roy Cerqueti and Raffaella Coppier

Economic Modelling, 2009, vol. 26, issue 6, 1239-1244

Abstract: In this paper we explore tax revenues in a regime of widespread fiscal corruption in a static framework. We prove that the relationship between the tax rate and tax revenues depends on the relevance of the "shame effect" of being detected in a corrupt transaction. In countries with a "low shame" effect, tax revenues grow as the tax rate increases. Moreover, there is a critical tax rate where the growth rate of tax revenues begins to reduce. In countries with a high "shame effect" tax revenues increase up to a threshold value and then decrease.

Keywords: Corruption; Evasion; Tax; revenues (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:26:y:2009:i:6:p:1239-1244

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