An Economic Analysis of Tax Amnesties

International Monetary Fund

No 1989/042, IMF Working Papers from International Monetary Fund

Abstract: Tax amnesties have frequently been justified as politically popular ways to generate increases in government revenue. This paper examines the circumstances under which amnesties are likely to have a beneficial impact on revenue collections. It concludes that, while in general it may be correct to impose a reduced penalty on individuals who voluntarily disclose tax evasion, short-lived amnesties of the type most frequently observed in practice are unlikely to generate significant revenue when judged against the potential danger of reducing future tax compliance.

Keywords: WP; cost function; audit rate; revenue authority; decision problem; government credibility; audit strategy; Auditing; Semi-autonomous revenue bodies; Tax evasion; Tax return filing compliance; Personal income (search for similar items in EconPapers)
Pages: 40
Date: 1989-01-01
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