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Tax compliance, default risk and GDP linked bonds
[Capacité de recouvrement des impôts, risque de défaut et obligations indexées sur le PIB]

Author

Listed:
  • Francesco Pappadà

Abstract

New cross-country evidence shows that VAT compliance is pro-cyclical, and its response to tax-rate hikes is sizeable and negative. Countries with highly sensitive tax compliance have a low ability to reimburse their debt, thus facing higher default risk. Issuing GDP linked bonds may protect such countries from the combined, cyclical risk of growing debt-to-GDP ratios and declining tax revenues. La capacité de recouvrement en matière de TVA est procyclique, et elle réagit négativement et significativement aux relèvements des taux d’imposition. Les pays qui présentent une forte sensibilité de la capacité de recouvrement ont une plus faible capacité à rembourser leurs dettes et sont donc confrontés à un risque de défaut plus élevé. L’émission d’obligations indexées sur le PIB peut protéger ces pays du risque conjugué en phase descendante du cycle de hausse du ratio de dette/PIB et de baisse des recettes fiscales.

Suggested Citation

  • Francesco Pappadà, 2017. "Tax compliance, default risk and GDP linked bonds [Capacité de recouvrement des impôts, risque de défaut et obligations indexées sur le PIB]," Eco Notepad 39, Banque de France.
    • Handle: RePEc:bfr:econot:39
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