Cryptocurrency use and tax collections: Direct and indirect channels of influence

Rajeev Goel and Ummad Mazhar

Journal of Financial Stability, 2024, vol. 72, issue C

Abstract: Using a recent global sample, this paper estimates the effect of cryptocurrency usage on tax revenue collections. We hypothesize that greater cryptocurrency use undermines tax collections, and this result generally holds across overall tax collections, VAT revenues, and GST revenues. The other contribution lies in dissecting the direct and indirect channels of cryptocurrency use on tax collections. Results show that greater cryptocurrency usage reduces tax collections. Furthermore, larger government sizes increase tax collections, while the COVID-19 pandemic undermined tax collections. Finally, significant differences were found in the direct and indirect effects. The main results withstand a number of robustness checks.

Keywords: Cryptocurrency; Tax collection; Mediation analysis; Informal economy; Corruption; Government; Money laundering; Inflation; Plastic money; VAT tax; GST tax (search for similar items in EconPapers)
JEL-codes: F33 H26 K42 O17 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:72:y:2024:i:c:s1572308924000366

DOI: 10.1016/j.jfs.2024.101251

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