Productivity and Tax Evasion
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Summary:
The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country’s development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion.
Series:
Working Paper No. 2019/260
Subject:
Labor productivity Production Productivity Revenue administration Tax administration core functions Tax evasion Tax return filing compliance
English
Publication Date:
November 27, 2019
ISBN/ISSN:
9781513518619/1018-5941
Stock No:
WPIEA2019260
Pages:
33
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