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Enforce taxes, but cautiously: societal implications of the slippery slope framework

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  • Stefanos A. Tsikas

Abstract

The general public often demands more frequent audits and harsher penalties to discourage tax evasion. This paper explores how deterrence via better-equipped tax agencies interrelates with the motivation to voluntarily pay taxes, and how both factors jointly influence tax evasion. For a panel of up to 25 European countries, this paper studies aggregate implications of the Slippery Slope hypothesis of tax compliance, and contributes to the literature on the societal dimension of tax evasion. The results suggest that both higher trust in authorities and increased deterrence efforts are positively associated with tax compliance. Trust and deterrence interact and depend on each other: if trust in authorities is low, an increase in tax enforcement works best for narrowing the tax gap (and vice versa). Generally, the positive influence of trust diminishes with increasing deterrence.

Suggested Citation

  • Stefanos A. Tsikas, 2020. "Enforce taxes, but cautiously: societal implications of the slippery slope framework," European Journal of Law and Economics, Springer, vol. 50(1), pages 149-170, August.
  • Handle: RePEc:kap:ejlwec:v:50:y:2020:i:1:d:10.1007_s10657-020-09660-8
    DOI: 10.1007/s10657-020-09660-8
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    2. Alain Marciano & Giovanni Ramello & Hans-Bernd Schaefer, 2020. "Foreword, special issue: economic analysis of litigations 2," European Journal of Law and Economics, Springer, vol. 50(1), pages 1-5, August.

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    More about this item

    Keywords

    Tax compliance; Trust in government; Tax enforcement; Slippery Slope Framework;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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