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The Evolution of Tax Evasion in the Czech Republic: A Markov Chain Analysis

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Author Info

  • Jan Hanousek

    (Center for Economic Research and Graduate Education-Economics Institute)

  • Filip Palda

    (École nationale d'administration publique at Montreal)

Abstract

We use a dataset of 1062 individuals from the Czech Republic to forecast the evolution of tax evasion in that country. We ask each respondent how intensely (never, sometimes, often) he evaded taxes in 1995, 1999, and 2000, to calculate probabilities the average individual will move between these categories of evasion in any given year. These "trasition" probabilities allow us to predict a rising tide of tax evasion in the next decade. We estimate the reduced form parameters which determine evasion and suggest how government might influence these parameters to prevent the Czech Republic from bogging down in a permanent mire of tax evasion. (JEL Codes : H26, H43, K42, O17)

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File URL: http://128.118.178.162/eps/pe/papers/0205/0205002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0205002.

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Date of creation: 09 May 2002
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Handle: RePEc:wpa:wuwppe:0205002

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Web page: http://128.118.178.162

Related research

Keywords: Tax evasion; transition economies; dynamic modelling; Czech Republic;

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References

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  1. Watson, Harry, 1985. "Tax evasion and labor markets," Journal of Public Economics, Elsevier, vol. 27(2), pages 231-246, July.
  2. Jan Hanousek & Filip Palda, 2002. "Why People Evade Taxes in the Czech and Slovak Republics: A Tale of Twins," Public Economics 0205003, EconWPA.
  3. Eduardo M.R.A. Engel & James R. Hines, Jr., 1999. "Understanding Tax Evasion Dynamics," NBER Working Papers 6903, National Bureau of Economic Research, Inc.
  4. repec:att:wimass:9610 is not listed on IDEAS
  5. Reinganum, Jennifer F & Wilde, Louis L, 1991. "Equilibrium Enforcement and Compliance in the Presence of Tax Practitioners," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(1), pages 163-81, Spring.
  6. Andreoni, J. & Erard, B. & Feinstein, J., 1996. "Tax Compliance," Working papers 9610r, Wisconsin Madison - Social Systems.
  7. Bernard Fortin & Guy Lacroix & Claude Montmarquette, 1997. "Are Underground Workers More Likely To Be Underground Consumers?," CIRANO Working Papers 97s-28, CIRANO.
  8. Jung, Young H. & Snow, Arthur & Trandel, Gregory A., 1994. "Tax evasion and the size of the underground economy," Journal of Public Economics, Elsevier, vol. 54(3), pages 391-402, July.
  9. Feige, Edgar L. & McGee, Robert T., 1983. "Sweden’s Laffer Curve: Taxation and the Unobserved Economy," Working Paper Series 95, Research Institute of Industrial Economics.
  10. Cremer, Helmuth & Gahvari, Firouz, 1996. "Tax evasion and the optimum general income tax," Journal of Public Economics, Elsevier, vol. 60(2), pages 235-249, May.
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Cited by:
  1. Pavla Nikolovova & Filip Pertold & Mario Vozar, 2013. "Self-employment and Small Workplaces in the Czech and Slovak Republics: Microeconometric Analysis of Labor Force Transitions," Discussion Papers 8, Central European Labour Studies Institute (CELSI).

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