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Tax Revenue Prediction under Condition of Imperfect Control over Tax-Collecting Authority


  • Stanislav Klazar


Public revenue forecasts should be accurate and unbiased, it means they should be the best estimates (in statistical view) of expected receipts. This paper analyzes the possible reasons for biased (overestimated or underestimated) tax revenue forecasts. Our modification of Danninger's theoretical model demonstrates that systematically (over a long period)and intentionally (deliberately) biased revenue forecasts can be result of the government's (principal's) attempt to increase the effort of tax-collecting authority (agent) to collect revenue. We carry out empirical analysis to test one of the model implications - relation between effort and relative grow of tax revenue. We use data from the years 2004 and 2005 for Corporate Income Tax collected in 16 tax-collecting authorities.

Suggested Citation

  • Stanislav Klazar, 2006. "Tax Revenue Prediction under Condition of Imperfect Control over Tax-Collecting Authority," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2006(3), pages 48-62.
  • Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:86:p:48-62

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    Cited by:

    1. Petr Marek, 2007. "Agency theory and Its Impact on Corporate Finance Theory," Český finanční a účetní časopis, University of Economics, Prague, vol. 2007(2), pages 6-16.

    More about this item


    agency theory; principal; agent; revenue forecast; biased forecast;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents


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