Imperfect Detection of Tax Evasion in a Corrupt Tax Administration

Diego Escobari

Public Organization Review, 2012, vol. 12, issue 4, 317-330

Abstract: This article models the imperfect detection of tax evasion motivated by the existence of a corrupt tax administration. Consistent with previous literature, fines and audit probabilities both have a positive effect on compliance. Moreover, the model shows that they have a negative effect on the bribes paid to corrupt tax officials. More corruption decreases compliance levels, giving honest auditors incentives to work harder to detect evasion. Giving inspectors a share of the detected evasion (tax farming) makes auditors work harder; however, increasing their wages reduces their exerted effort to discover evasion. Higher compliance can as well be achieved by hiring more efficient inspectors. Copyright Springer Science+Business Media, LLC 2012

Keywords: Taxation; Evasion; Corruption; Tax administration (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Working Paper: Imperfect Detection of Tax Evasion in a Corrupt Tax Administration (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:porgrv:v:12:y:2012:i:4:p:317-330

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DOI: 10.1007/s11115-011-0172-5

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