IDEAS home Printed from https://ideas.repec.org/a/dse/indecr/v43y2008i1p125-139.html
   My bibliography  Save this article

Corruption, Harassment and Evasion in Tax Collection

Author

Listed:
  • Nitin Kumar

    (Indira Gandhi Institute of Development Research, Mumbai 400065, India)

Abstract

The phenomenon of tax evasion is a universal problem especially prevalent in transition economies. What is the compliance/evasion decision of the taxpayers in presence of corruptible inspector and revenue maximizing government? How does a corrupt regime affect the task of tax collection? What is the optimal audit scheme for the government? This paper studies the strategic interaction between taxpayer and inspector in a sequential game theoretic framework and finds that despite inspection there can be suboptimal collection of taxes in a corrupt regime because of harassment, bribery and the possibility of collusion between the inspector and the taxpayer. In a corrupt regime the cost of corruption has a regressive bias. Also, it is interesting to note that under such a setup the proportional evasion performed by the poorer section is more than that of the richer section.

Suggested Citation

  • Nitin Kumar, 2008. "Corruption, Harassment and Evasion in Tax Collection," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 43(1), pages 125-139, July.
  • Handle: RePEc:dse:indecr:v:43:y:2008:i:1:p:125-139
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    Tax Evasion; Corruption; Harassment; Extortion;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dse:indecr:v:43:y:2008:i:1:p:125-139. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pami Dua). General contact details of provider: http://edirc.repec.org/data/deudein.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.