Tax evasion by tax deferment: Sham litigation with an informal credit market

Sugata Marjit, Suryaprakash Mishra and Sandip Mitra

European Journal of Political Economy, 2021, vol. 69, issue C

Abstract: We show theoretically how tax evasion is facilitated by informal credit market through tax deferment. Our model is empirically based. Using sham litigation, tax evaders earn a higher rate of return than the stipulated penalty rate for tax evasion while the government loses tax revenue. We propose an upfront part–payment of the disputed amount of tax as a solution to the form of tax evasion we describe.

Keywords: Delayed tax payment; Tax evasion; Sham litigation; Informal credit market (search for similar items in EconPapers)
JEL-codes: H25 H26 H32 K34 K41 K42 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:69:y:2021:i:c:s0176268021000094

DOI: 10.1016/j.ejpoleco.2021.102008

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