Why does a Large Shadow Economy not show up in Administrative Inspections?
AbstractThis paper deals with the apparent gap that exists between very high estimates of the size of the shadow economy and the results of various tax and policy authorities’ inspections. The analyses are based on Finnish data, with the benchmark values for the size of the shadow economy taken from a recent parliamentary investigation which arrived at very high values for all types of shadow economy activities. These estimates are compared with the Finnish Tax Administration’s own data on tax audits. The data are also used in assessing the fiscal results from tax inspections and other administrative actions. These values suggest that it is pointless to spend enormous amounts of resources to curtail the shadow economy unless one can show that there are important economies of scale in tax audits and law enforcement. Our estimates do not support the idea of increasing returns in tax audits.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).
Volume (Year): 42 (2012)
Issue (Month): 2 (September)
shadow economy; taxation; tax audits; national accounts;
Find related papers by JEL classification:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stix, Helmut, 2012.
"Why Do People Save in Cash? Distrust, Memories of Banking Crises, Weak Institutions and Dollarization,"
178, Oesterreichische Nationalbank (Austrian Central Bank).
- Stix, Helmut, 2013. "Why do people save in cash? Distrust, memories of banking crises, weak institutions and dollarization," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4087-4106.
- Kari Takala & Matti Viren, 2010. "Is Cash Used Only in the Shadow Economy?," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 525-540.
- Michael Pickhardt & Jordi Sardà, .
"Cash, Hoarding and the Underground Economy,"
201282, Institute of Spatial and Housing Economics, Munster Universitary.
- Hildegart Ahumada & Facundo Alvaredo & Alfredo Canavese, 2007. "The Monetary Method And The Size Of The Shadow Economy: A Critical Assessment," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 363-371, 06.
- Cebula, Richard, 1996. "An Empirical Analysis of the Impact of Government Tax and Auditing Policies on the Size of the Underground Economy: The Case of the United States, 1973-94," MPRA Paper 49810, University Library of Munich, Germany.
- Ahumada, Hildegart & Alvaredo, Facundo & Canavese, Alfredo, 2008. "The monetary method to measure the shadow economy: The forgotten problem of the initial conditions," Economics Letters, Elsevier, vol. 101(2), pages 97-99, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manuela Torgler).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.