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Whistle-blowers as a Deterrent to Tax Evasion


  • Yosef Mealem

    (Netanya Academic College, Israel)

  • Yossef Tobol

    (Bar-Ilan University, Ramat-Gan, Israel)

  • Gideon Yaniv

    (COM Academic Studies, Rishon LeZion, Israel,


The economic literature on audit design has almost entirely ignored tax agencies’ practical reliance on whistle-blowers for the successful conduct of tax investigations. The authors compare the tax agency’s performance under a one-round blind-audit policy and a two-round whistle-blowing-intensive policy that invites whistle-blowers to blow the whistle on tax evaders who have escaped auditing in the first round. The authors show that if providing incentives for tax evasion is desirable under the one-round blind-audit scheme, the tax agency might be better off running a second, whistle-blowing-triggered, round, threatening to audit a sufficiently high fraction of the denounced evaders that will deter them from evading taxes. Hence, there will actually be no denouncing by honest whistle-blowers, who will find themselves serving as a deterrent to tax evasion without actually satisfying their desire for revenge or collecting a monetary reward. Committed to its threat, the tax agency will only be auditing falsely denounced non-evaders.

Suggested Citation

  • Yosef Mealem & Yossef Tobol & Gideon Yaniv, 2010. "Whistle-blowers as a Deterrent to Tax Evasion," Public Finance Review, , vol. 38(3), pages 306-320, May.
  • Handle: RePEc:sae:pubfin:v:38:y:2010:i:3:p:306-320

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    Cited by:

    1. Matthew Gould & Matthew Rablen, 2016. "Voluntary Disclosure Schemes for Offshore Tax Evasion: An Analysis," CESifo Working Paper Series 5750, CESifo Group Munich.
    2. Cécile Bazart & Mickael Beaud & Dimitri Dubois, 2017. "Whistleblowing vs random audit: An experimental test of relative effciency," Working Papers 17-04, LAMETA, Universtiy of Montpellier.


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