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The Occurrence of Tax Amnesties. Theory and Evidence

Author

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  • Ralph-C. Bayer
  • Harald Oberhofer
  • Hannes Winner

    (Austrian Institute of Economic Research)

Abstract

This paper presents a theoretical model and empirical evidence to explain the occurrence of tax amnesties. We treat amnesties as endogenous, resulting from a strategic game between many tax payers discounting future payments from punishment and a government that trades off costs and benefits of amnesty programmes. From the model we derive hypotheses about the factors that should influence the occurrence of tax amnesties. For our empirical test we rely on amnesty information from US states between 1981 and 2011. In line with the theoretical model, our empirical findings suggest that the likelihood of amnesties is mainly driven by a government's fiscal requirements and the taxpayers' expectations on future amnesties.

Suggested Citation

  • Ralph-C. Bayer & Harald Oberhofer & Hannes Winner, 2014. "The Occurrence of Tax Amnesties. Theory and Evidence," WIFO Working Papers 487, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2014:i:487
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    2. Michael Masiya, 2019. "Lessons from Voluntary Compliance Window (VCW): Malawi's tax amnesty programme," CESifo Working Paper Series 7584, CESifo.
    3. Bayer, Ralph-C. & Oberhofer, Harald & Winner, Hannes, 2015. "The occurrence of tax amnesties: Theory and evidence," Journal of Public Economics, Elsevier, vol. 125(C), pages 70-82.
    4. Dominika Langenmayr, 2017. "Voluntary Disclosure of Evaded Taxes—Increasing Revenue, or Increasing Incentives to Evade?," NBER Chapters, in: Personal Income Taxation and Household Behavior (TAPES), National Bureau of Economic Research, Inc.
    5. Agnes Aurora Ngelo & Yani Permatasari & Iman Harymawan & Nadia Anridho & Khairul Anuar Kamarudin, 2022. "Corporate Tax Avoidance and Investment Efficiency: Evidence from the Enforcement of Tax Amnesty in Indonesia," Economies, MDPI, vol. 10(10), pages 1-22, October.
    6. Patrice Ollivaud, 2017. "Improving the allocation and efficiency of public spending in Indonesia," OECD Economics Department Working Papers 1381, OECD Publishing.
    7. Heiner Schmittdiel, 2015. "Voluntary Disclosure Programs for Tax Evaders," Tinbergen Institute Discussion Papers 15-128/VII, Tinbergen Institute.
    8. Matthew Gould & Matthew D. Rablen, 2020. "Voluntary disclosure schemes for offshore tax evasion," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 805-831, August.
    9. Juliana Londoño-Vélez & Javier Ávila-Mahecha, 2021. "Enforcing Wealth Taxes in the Developing World: Quasi-experimental Evidence from Colombia," American Economic Review: Insights, American Economic Association, vol. 3(2), pages 131-148, June.
    10. Ahmed Muhammad Ashfaq, 2019. "Pakistan: Economy under Elites – Tax Amnesty Schemes, 2018," Asian Journal of Law and Economics, De Gruyter, vol. 10(2), pages 1-18, August.
    11. Ahmed, Muhammad Ashfaq & Malik, Ikram Ali & Nawaz, Nasreen, 2022. "Pakistan: Economy Under Elites— Tax Amnesty Scheme, 2019," MPRA Paper 113918, University Library of Munich, Germany.
    12. Garz, Marcel & Pagels, Verena, 2018. "Cautionary tales: Celebrities, the news media, and participation in tax amnesties," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 288-300.
    13. Javier Moreno & Jaime H. Beltrán & Leovardo Mata, 2019. "Efectos de corto y largo plazo de los programas de condonación de créditos fiscales en la recaudación del Impuesto al Valor Agregado," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(1), pages 113-128, Enero-Mar.
    14. Azeem Mujahid & Danish Ahmed Siddiqui, 2019. "The Effect of Tax Amnesties Programs on Tax Collection and Economic Performance: A Global Macro Economic Analysis," International Journal of Social and Administrative Sciences, Asian Economic and Social Society, vol. 4(2), pages 108-128, June.
    15. Canavire-Bacarreza, Gustavo & Eguino, Huáscar & Heller, Lorena & Roman, Soraya, 2023. "When do tax amnesties work?," Journal of Economic Behavior & Organization, Elsevier, vol. 207(C), pages 350-375.
    16. Koch, Christian & Müller, Cornelius, 2022. "Tax Amnesties and the Insurance Effect: An Experimental Study," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112991, Verein für Socialpolitik / German Economic Association, revised 2022.

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    More about this item

    Keywords

    US states; strategic game; tax amnesties;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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