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Fiscal anarchy in the UK: modelling poll tax noncompliance

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  • Timothy Besley
  • Ian Preston
  • Michael Ridge

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

Paper provided by Economics and Finance Section, School of Social Sciences, Brunel University in its series Public Policy Discussion Papers with number 96-02.

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Handle: RePEc:bru:bruppp:96-02

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Postal: Brunel University, Uxbridge, Middlesex UB8 3PH, UK

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References

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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. Werner Gueth & Rupert Sausgruber, 2004. "Tax Morale and Optimal Taxation," Papers on Strategic Interaction 2004-12, Max Planck Institute of Economics, Strategic Interaction Group.
  3. 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 .
  4. 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.
  5. Tamás K. Papp & Elöd Takáts, 2008. "Tax Rate Cuts and Tax Compliance--The Laffer Curve Revisited," IMF Working Papers 08/7, International Monetary Fund.

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