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Monitoring Expenditures on Tax Collection and Tax Evasion: The Case of Iran

Author

Listed:
  • Ali Hussein Samadi

    (Department of Economics, Faculty of Economics, Management and Social Sciences, Shiraz University, Shiraz, Iran.)

  • Shohreh Nasirabadi

    (Department of Economics, Faculty of Economics, Management and Social Sciences, Shiraz University, Shiraz, Iran.)

Abstract

The main aim of this paper is analyzing the relationship between tax evasion and the monitoring expenditure on tax collection in Iran. For doing so, we have used a simulation model for determining optimal level of monitoring expenses on tax collection. The results showed that, a greater portion of government expenses must be allocated to monitor the tax collection, although do this reduces tax evasion, but have a negative effect on economic growth. Thus, instead of increasing monitoring expenses in line with reducing tax evasion, it is better to reduct taxes rate in a way that in addition not to decrease in motivation of economic agents activity, it also decreases motivation for tax evasion.

Suggested Citation

  • Ali Hussein Samadi & Shohreh Nasirabadi, 2019. "Monitoring Expenditures on Tax Collection and Tax Evasion: The Case of Iran," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 23(1), pages 149-161, Winter.
    • Handle: RePEc:eut:journl:v:23:y:2019:i:1:p:149
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