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Tax Evasion: An Analysis Of The Collocation “Pay With Money, Not With Years”

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  • Delia Catarama

    (Academy of Economic Studies, Bucharest)

Abstract

This paper analyses whether the adoption, in 2005, of a new law with drastic penalties for combating tax fraud had the expected results. I do this by an event study in the period 2003-2005. I computed the expected average sanction for a legal person in case of tax fraud. I found that the expected average sanction was of 43.57% of prejudice in 2003 reaching 5.59% of prejudice in 2005. I conclude that the collocation „Pay with money, not with years” was not connected to the reality, as in 2005 the average prejudice was of 8,000 euro, while the sanction with prison is for prejudices over 100,000 euros. Also, in the same year 2005, the sanction with fine was of 5.56% of the prejudice. Thus, I consider that the right collocation should have been you pay no money and no years”.

Suggested Citation

  • Delia Catarama, 2008. "Tax Evasion: An Analysis Of The Collocation “Pay With Money, Not With Years”," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 11(11(528)(s), pages 65-71, November.
    • Handle: RePEc:agr:journl:v:11(528)(supplement):y:2008:i:11(528)(supplement):p:65-71
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