Transparency and corruption: an optimal taxation policy

Mohamed Jellal () and Mohamed Bouzahzah

European Economic Letters, 2013, vol. 2, issue 2, 66-70

Abstract: Under Principal-Agent-Supervisor paradigm, we examine in this paper how a tax collection agency changes optimal schemes in order to lessen the occurrence of corruption between the tax collector and the taxpayer. Indeed, the Principal, who maximizes the expected net fiscal revenue, reacts by decreasing tax rates when the supervisor is likely to engage in corrupt transaction with taxpayer. Therefore, the optimal policy against collusion and corruption may explain the rational of the greater reliance on indirect taxes than on direct taxes both in developed and developing countries.

Keywords: Transparency; Principal-Supervisor-Agent; Corruption; Tax evasion (search for similar items in EconPapers)
JEL-codes: D82 H20 H40 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (29)

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