Tax Rates and Tax Evasion: An Empirical Analysis of the Structural Aspects and Long-Run Characteristics in Italy

Bruno Chiarini, Elisabetta Marzano and Friedrich Schneider ()

No 3447, IZA Discussion Papers from IZA Network @ LISER

Abstract: By using official time series of the Italian evaded VAT base (Ministry of Finance) for the period 1980-2004 we investigate empirically the long-run characteristics of tax evasion and the relationship with the tax burden. We focus on three important issues not analyzed so far. First, using different measures of aggregate economic activity as reference variables in estimating the average tax burden, we investigate the size and dynamics of the over-burden traceable back to tax evasion. Second, exploiting cointegration techniques, we quantify the elasticity between tax evasion and the average tax rate in Italy. We then comment on the complex dynamic interaction between tax burden and tax evasion, to ascertain whether in the Italian experience there is evidence for any “vicious circle” between them.

Keywords: effective tax rate; VAT evasion; tax evasion; apparent tax rate; VECM (search for similar items in EconPapers)
JEL-codes: C32 H26 H30 O17 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2008-04
New Economics Papers: this item is included in nep-acc, nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published - revised version published as 'Tax Rate and Tax Evasion: An Empirical Analysis of the Long-run Aspects in Italy', in: European Journal of Law and Economics, 35(2) 2013, 273-293

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Working Paper: Tax rates and Tax evasion: an Empirical Analysis of the Structural Aspects and Long-Run Characteristics in Italy
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