Tax Reform in Georgia and the Size of the Shadow Economy
AbstractThis paper applies three different methods widely used in the literature to track changes in shadow economic activity in Georgia following a drastic tax reform in 2005. The first method is a currency demand approach based on macro level data. The second and third methods rely on micro data from household surveys. Overall, we find evidence that the amount of income underreporting decreased in the years following the reform. The biggest change is observed for households headed by a farmer, followed by "other" types of households where the head does not report any working status. Employed and self-employed households appear very similar before the tax reform and show minimal adjustment in income reporting in the post-reform period. Results, however, suggest that much of any difference may have come from increased enforcement efforts rather than rate changes.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6912.
Length: 43 pages
Date of creation: Oct 2012
Date of revision:
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Other versions of this item:
- Karine Torosyan & Randall K. Filer, 2012. "Tax Reform in Georgia and the Size of the Shadow Economy," Hunter College Department of Economics Working Papers 439, Hunter College: Department of Economics.
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-10-27 (Accounting & Auditing)
- NEP-ALL-2012-10-27 (All new papers)
- NEP-IUE-2012-10-27 (Informal & Underground Economics)
- NEP-PBE-2012-10-27 (Public Economics)
- NEP-TRA-2012-10-27 (Transition Economics)
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