The tax gap as a public management instrument: application to wealth taxes

Jose M. Duran-Cabre, Alejandro Esteller Moré, Mariona Mas-Montserrat and Luca Salvadori

Applied Economic Analysis, 2019, vol. 27, issue 81, 207-225

Abstract: Purpose - The purpose of this paper is to study the concept of tax gap, that is the difference between the total amount of taxes collected and the total tax revenues that would be collected under full tax compliance. Design/methodology/approach - The authors also present the methodology to estimate the gap for two taxes levied on wealth: the wealth tax and the inheritance and gift tax; both are administered in Spain by the regional tax authorities. Findings - The authors point out that its estimation offers useful information about the relative size and nature of non-compliance, as well as its evolution over time. Likewise, the tax gap is a valuable instrument not only to define enforcement strategies of the tax administration but also to enhance its accountability. Nonetheless, the methodology used to estimate the tax gap and, consequently, the interpretation of the results is subject to limitations that are discussed in the paper. Originality/value - Finally, the paper provides the results of the estimations obtained from using microdata: 44.34 per cent gap in the wealth tax and 41.26 per cent in the inheritance and gift tax.

Keywords: Accountability; Tax gap; Fiscal transparency; Tax administration; Tax enforcement; H 26; H 83 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:aeapps:aea-09-2019-0028

DOI: 10.1108/AEA-09-2019-0028

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