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Bureaucratic Corruption and Profit Tax Evasion

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  • Laszlo Goerke

Abstract

Firms may evade taxes on profits and can also avoid fulfilling legal restrictions on production activities by bribing bureaucrats. It is shown that the existence of tax evasion does not affect corruption activities at the firm level, while the budgetary repercussions of tax evasion induce less corruption. Policy measures which alter the gains or losses from corruption have a non-systematic impact on tax evasion behaviour.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2006/wp-cesifo-2006-02/cesifo1_wp1666.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1666.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1666

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Keywords: corruption; firms; tax evasion;

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References

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  1. Daniel Kaufmann & Shang-Jin Wei, 2000. "Does 'Grease Money' Speed Up the Wheels of Commerce?," IMF Working Papers 00/64, International Monetary Fund.
  2. Martinez-Vazquez, Jorge & Rider, Mark, 2005. "Multiple Modes of Tax Evasion: Theory and Evidence," National Tax Journal, National Tax Association, vol. 58(1), pages 51-76, March.
  3. Gideon Yaniv, 1996. "Tax Evasion and Monopoly Output Decisions: Note," Public Finance Review, , vol. 24(4), pages 501-505, October.
  4. Hindriks, J. & Keen, M. & Muthoo, A., 1998. "Corruption, Extortion and Evasion," Discussion Papers 9809, Exeter University, Department of Economics.
  5. Sanyal, Amal & Gang, Ira N & Goswami, Omkar, 2000. " Corruption, Tax Evasion and the Laffer Curve," Public Choice, Springer, vol. 105(1-2), pages 61-78, October.
  6. Paolo M. Panteghini, 2000. "Tax Evasion and Entrepreneurial Flexibility," Public Finance Review, , vol. 28(3), pages 199-209, May.
  7. Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, vol. 76(3), pages 459-493, June.
  8. Sanyal, Amal, 2002. "Audit Hierarchy in a Corrupt Tax Administration: A Note with Qualifications and Extensions," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 317-324, June.
  9. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-41, January.
  10. Sanyal, Amal, 2000. "Audit Hierarchy in a Corrupt Tax Administration," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 364-378, June.
  11. Chu, C Y Cyrus, 1990. "A Model of Income Tax Evasion with Venal Tax Officials: The Case of Taiwan," Public Finance = Finances publiques, , vol. 45(3), pages 392-408.
  12. Chander, Parkash & Wilde, Louis, 1992. "Corruption in tax administration," Journal of Public Economics, Elsevier, vol. 49(3), pages 333-349, December.
  13. Jorge Martinez-Vazquez & Mark Rider, 2003. "Multiple Modes of Tax Evasion: Theory and Evidence from the TCMP," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0306, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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Citations

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Cited by:
  1. Bernard Gauthier & Jonathan Goyette, 2012. "Fiscal policy and corruption," Cahiers de recherche 12-09, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  2. Escobari, Diego, 2011. "Imperfect Detection of Tax Evasion in a Corrupt Tax Administration," MPRA Paper 39198, University Library of Munich, Germany.
  3. Clara Delavallade, 2011. "What Drives Corruption? Evidence from North African Firms," Working Papers 244, Economic Research Southern Africa.
  4. Doina Pacurari, 2013. "Profit Tax Or Income Tax? Options For Fiscal Optimization Of Romanian Small Companies," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 18.
  5. Jellal, Mohamed & Bouzahzah, Mohamed, 2012. "Rentes et corruption au maroc théorie et evidence
    [Morocco rents and corruption theory and evidence]
    ," MPRA Paper 38750, University Library of Munich, Germany.
  6. Bernard Gauthier & Jonathan Goyette, 2012. "Taxes and bribery: The role of monitoring, bargaining power and red tape," Cahiers de recherche 12-08, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  7. Francoise Forges & Frederic Koessler, 2006. "Long Persuasion Games," THEMA Working Papers 2006-01, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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