The effect of perfect monitoring of matched income on sales tax compliance: An experimental investigation

Cathleen Johnson, David Masclet () and Claude Montmarquette
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Cathleen Johnson: CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal

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Abstract: Tar noncompliance is a quantitatively important phenomenon that significantly affects government revenues. and thus raises challenging questions about the determinants of tax reporting and the appropriate design of a tax system. This paper provides empirical insights regarding the nature of tar noncompliance, using an experimental approach to evaluate the effects of systematic sales tax monitoring and identify the determinants of sales tax compliance The results suggest that if perfect monitoring of a single revenue source is introduced without other complementary policies, an increase in tax revenues is not the likely, outcome as evasion increases for other revenue sources That is, the data suggest that once taxpayers have chosen their level of tax compliance, they, will try to recover their losses following any policy changes, even if it implies assuming more risks.

Keywords: reference dependent effect; experimental economics; perfect monitoring; tax (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (8)

Published in National Tax Journal, 2010, 63 (1), pp.121-148. ⟨10.17310/ntj.2010.1.05⟩

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Related works:
Journal Article: The Effect of Perfect Monitoring of Matched Income on Sales Tax Compliance: An Experimental Investigation (2010)
Working Paper: The Effect of Perfect Monitoring of Matched Income on Sales Tax Compliance: An Experimental Investigation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00601691

DOI: 10.17310/ntj.2010.1.05

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