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On the effects of repeated tax amnesties

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  • Miguel A. SANCHEZ VILLALBA

    (London School of Economics, United Kingdom.)

Abstract

We examine empirically the effect of tax amnesties on long term tax collection when such amnesties are used by a government as a regular source of revenue. We use data from the Tucuman province (Argentina) to test the main hypothesis of the model, namely, that amnesties lower the government s revenue, as they reduce the penalties and make evasion more profitable. We find, however, that amnesties do not affect the long-term revenue. The other main result is in line with the theoretical predictions: the increase in short-run revenue is temporary and only accelerates the collection of the taxes but does not increase the amount collected. Thus, we conclude that amnesties were used only to obtain a short-run surge in revenue and to avoid more fundamental tax reforms.

Suggested Citation

  • Miguel A. SANCHEZ VILLALBA, 2017. "On the effects of repeated tax amnesties," Journal of Economics and Political Economy, EconSciences Journals, vol. 4(3), pages 285-301, September.
    • Handle: RePEc:cvv:journ1:v:4:y:2017:i:3:p:285-301
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    References listed on IDEAS

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    1. Malik, Arun S. & Schwab, Robert M., 1991. "The economics of tax amnesties," Journal of Public Economics, Elsevier, vol. 46(1), pages 29-49, October.
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    4. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    5. Stella, Peter, 1991. "An economic analysis of tax amnesties," Journal of Public Economics, Elsevier, vol. 46(3), pages 383-400, December.
    6. Alm, James & McKee, Michael J. & Beck, William, 1990. "Amazing Grace: Tax Amnesties and Compliance," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(1), pages 23-37, March.
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    8. Andreoni, James, 1991. "The desirability of a permanent tax amnesty," Journal of Public Economics, Elsevier, vol. 45(2), pages 143-159, July.
    9. Alm, James & Beck, William, 1993. "Tax Amnesties and Compliance in the Long Run: A Time Series Analysis," National Tax Journal, National Tax Association, vol. 46(1), pages 53-60, March.
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    Keywords

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    JEL classification:

    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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