Can Tax Reform Work in an Economy Where Tax Avoidance and Evasion are Endemic?

Edimon Ginting

No 266343, Center of Policy Studies (COPS) Impact Project Papers from Monash University Center of Policy Studies

Abstract: In this model firms seek to minimise their tax liabilities by purchasing rent seeking services from a provider who also sells legitimate public services to the government. The provider enjoys economies of scope — its two outputs are produced jointly. Tax reform in this setting can increase both government revenue and the efficiency of the economy because a type of Laffer curve is operational and because such reform can lead to resources being moved out of rent-seeking activity. Later this partial equilibrium framework will be embedded within a conventional general equilibrium model.

Keywords: Financial Economics; Public Economics (search for similar items in EconPapers)
Pages: 37
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Persistent link: https://EconPapers.repec.org/RePEc:ags:copspp:266343

DOI: 10.22004/ag.econ.266343

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