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Fiscal anarchy in the UK: Modelling poll tax noncompliance

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  • Besley, Timothy
  • Preston, Ian
  • Ridge, Michael

Abstract

The U.K.'s experience with the poll tax reminds us that even in an economy with a relatively well developed detection and legal system, one cannot take tax compliance for granted. The experience of the poll tax provides a unique opportunity to study many dimensions of tax compliance. We model nonpayment rates in a short panel of data on the 366 English local authorities. The transparent observability of individual and aggregate liabilities makes reliable measurement of rates of nonpayment possible. Moreover, these rates rose to unprecedented levels as well as exhibiting considerable variation across authorities. This, together with the variation in local taxes both between districts and over time, creates an ideal opportunity for empirical investigation. Our empirical specification allows us to investigate the determinants of compliance as a function of authority characteristics from census and other geographical data. Moreover, the analysis takes seriously the possibility of neighbourhood influences across authority boundaries. Our empirical results confirm the idea that higher taxes lead to larger compliance problems and that attempts to enforce compliance have a positive effect. Neighbourhood effects on non-compliance were less conspicuous, figuring significantly, if at all, only in the final year.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 64 (1997)
Issue (Month): 2 (May)
Pages: 137-152

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Handle: RePEc:eee:pubeco:v:64:y:1997:i:2:p:137-152

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Web page: http://www.elsevier.com/locate/inca/505578

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Cited by:
  1. Pezzey, John C.V., 2001. "Distributing the Value of a Country’s Tradeable Carbon Permits," 2001 Conference (45th), January 23-25, 2001, Adelaide 125832, Australian Agricultural and Resource Economics Society.
  2. Gale, William G., 1997. "What Can America Learn from the British Tax System?," National Tax Journal, National Tax Association, vol. 50(4), pages 753-77, December.
  3. Pablo Serra, 2000. "Fundamentos para una Reforma Tributaria en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 37(111), pages 299-322.
  4. Werner Güth & Rupert Sausgruber, 2004. "Tax Morale and Optimal Taxation," CESifo Working Paper Series 1284, CESifo Group Munich.
  5. Tamás K. Papp & Elöd Takáts, 2008. "Tax Rate Cuts and Tax Compliance," IMF Working Papers 08/7, International Monetary Fund.

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