Tax enforcement using a hybrid between self- and third-party reporting

Sarah Clifford and Panos Mavrokonstantis

Journal of Public Economics, 2021, vol. 203, issue C

Abstract: We study a tax enforcement policy combining elements of self- and third-party reporting. Taxpayers self-report to the authority but must file documentation issued by a third-party to corroborate claims. Exploiting salary-dependent cutoffs governing documentation requirements when claiming deductions for charitable contributions in Cyprus, we estimate that deductions increase by £0.7 when taxpayers can claim £1 more without documentation. Second, using a retroactive reform we find that at least 64% of the response is purely a reporting adjustment representing mainly over-reporting of deductions. Finally, reporting rules drive the behaviour of many taxpayers who display little responsiveness to financial incentives for giving.

Keywords: Tax enforcement; Tax compliance; Charitable giving; Tax design (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:203:y:2021:i:c:s0047272721001559

DOI: 10.1016/j.jpubeco.2021.104519

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