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Tax structures in developing countries: Many puzzles and a possible explanation

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  • Gordon, Roger
  • Li, Wei

Abstract

Tax policies seen in developing countries are puzzling on many dimensions, given the sharp contrast between these policies and both those seen in developed countries and those forecast in the optimal tax literature. In this paper, we explore how forecasted policies change if firms can successfully evade taxes by conducting all business in cash, thereby avoiding any use of the financial sector. The forecasted policies are now much closer to those observed.

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Bibliographic Info

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

Volume (Year): 93 (2009)
Issue (Month): 7-8 (August)
Pages: 855-866

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Handle: RePEc:eee:pubeco:v:93:y:2009:i:7-8:p:855-866

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

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Keywords: Tax policy in developing countries Informal economy Inflation Tariffs Red tape Capital taxes Corruption;

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