Effects of institutional history and leniency on collusive corruption and tax evasion

Johannes Buckenmaier, Eugen Dimant and Luigi Mittone

No 295, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: We investigate the effects of an institutional mechanism that incentivizes taxpayers to blow the whistle on collusive corruption and tax compliance. We explore this through a formal leniency program. In our experiment, we nest collusive corruption within a tax evasion framework. We not only study the effect of the presence of such a mechanism on behavior, but also the dynamic effect caused by the introduction and the removal of leniency. We find that in the presence of a leniency mechanism, subjects collude and accept bribes less often while paying more taxes, but there is no increase in bribe offers. Our results show that the introduction of the opportunity to blow the whistle decreases the collusion and bribe acceptance rate, and increases the collected tax yield. It also does not encourage bribe offers. In contrast, the removal of the institutional mechanism does not induce negative effects, suggesting a positive spillover effect of leniency that persists even after the mechanism has been removed.

Keywords: Collusive bribery; institutions; tax compliance; leniency; spillover (search for similar items in EconPapers)
JEL-codes: C92 D02 D73 H26 K42 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-exp, nep-iue, nep-law and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Effects of institutional history and leniency on collusive corruption and tax evasion (2020)
Working Paper: Effects of Institutional History and Leniency on Collusive Corruption and Tax Evasion (2018)
Working Paper: Effects of Institutional History and Leniency on Collusive Corruption and Tax Evasion (2017)
Working Paper: Tax Evasion and Institutions. An Experiment on The Role of Principal Witness Regulations (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:295

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