The Relationship between Tax Amnesties and Tax Revenues in Türkiye: Empirical Evidence for Broken Window Theory

Tax revenues are the main source of public revenue used by states in the provision of public goods and services. In order to respond to the changing and increasing social needs over time, it is very important to collect tax revenues from continuous and regular sources. Economic, financial, political, social, cultural, psychological and moral values determine the level of tax revenues. Tax, as one of the most important components of the relationship between the individual and the state, also shows the confidence between these two units. Tax amnesties remove the legal sanctions and penalties of all or some of the unpaid taxes. According to the theory of broken windows, the evaluation of tax crimes as petty crimes and not being subject to sanctions, as well as their forgiveness, may lead to the emergence of more serious tax crimes. The results of tax amnesty, which may damage the trust of honest taxpayers to the state/institutions, are very important for policymakers. If tax amnesties show the expected benefits and increase revenue in the short and long term, it may be said that the broken windows theory is invalid. This study examines the effect of tax amnesties on tax revenues in Türkiye with cointegration method for the period 1996-2021. Institutional quality, which is an important variable affecting confidence, is included in the model as a control variable. Unlike other studies, revenues from tax amnesties are calculated annually. The analysis findings provide evidence for the validity of the broken windows theory and that tax amnesties generally do not affect tax revenues.