This paper is concerned with the extent to which “presumptive taxation” can be an effective tool to cope with what are commonly called the “hard-to-tax”. While the HTT category is seldom very clearly defined -- often, for example, it excludes those at the top of the power pyramid who manage to save themselves from the full fury of the taxman in accepted (or at least untouchable) ways -- it appears to encompass much of the so-called “informal” (“hidden” “shadow” “underground”) economy that is such a prominent feature of economic reality in many developing and transition countries. Although much of the discussion in this paper covers the use (and abuse) of presumptive taxes in general, our specific focus is on the special simplified tax regimes that have been put into place recently in a number of transitional countries, with special attention to Ukraine and Russia. We analyze the implications of these special regimes in terms of their impact on economic efficiency, equity, and overall tax administration and compliance. We conclude with a brief discussion of the critical problems of developing an “exit strategy” from such special regimes as well as some alternative policies that may prove more promising paths to taxing the HTT.
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Paper provided by International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto in its series International Tax Program Papers with number
0307.
Find related papers by JEL classification: O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
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Slemrod, Joel & Yitzhaki, Shlomo, 2002.
"Tax avoidance, evasion, and administration,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470
Elsevier.
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Richard Bird & Eric Zolt, 2007.
"Tax Policy in Emerging Countries,"
International Tax Program Papers
0707, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
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