IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_7584.html
   My bibliography  Save this paper

Lessons from Voluntary Compliance Window (VCW): Malawi's tax amnesty programme

Author

Listed:
  • Michael Masiya

Abstract

The Malawi Revenue Authority (MRA) implemented the Voluntary Compliance Window (VCW) in 2013/2014 fiscal year as a means of bringing non-compliant taxpayers into the tax net. The programme was a huge success in terms of revenue and the cost of collection at 0.8% was by far below the 3% benchmark for the gross tax revenues of the Authority. However, the long-term compliance impact of the programme was not evaluated. Hence, the paper intends to bridge knowledge gap. Firstly, observing trends in debts and penalty payments covering and extending beyond the amnesty period, the paper finds that debts substantially declined after amnesty period while penalties rose sharply after VCW. Secondly, by constructing a counterfactual for large taxpayers, the paper finds that tax payments of participants significantly improved after the programme. Thirdly, the paper examines tax payment patterns by VCW participants one year after the programme. About 75 percent of amending filers subsequently paid their taxes one year after VCW with a higher mean income than the non-subsequent taxpayers. Lastly, the paper finds that smuggling remains high after observing variations in customs offences during VCW and a year later, in FY2015/16. The question remains “Should Malawi reconsider another Voluntary Compliance Window after 3 years?” The paper agrees with most previous studies by strongly discouraging another amnesty while encouraging post-amnesty enforcement efforts.

Suggested Citation

  • Michael Masiya, 2019. "Lessons from Voluntary Compliance Window (VCW): Malawi's tax amnesty programme," CESifo Working Paper Series 7584, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7584
    as

    Download full text from publisher

    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp7584.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Mikesell, John L. & Ross, Justin M., 2012. "Fast Money? The Contribution of State Tax Amnesties to Public Revenue Systems," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(3), pages 529-562, September.
    2. Malik, Arun S. & Schwab, Robert M., 1991. "The economics of tax amnesties," Journal of Public Economics, Elsevier, vol. 46(1), pages 29-49, October.
    3. Bayer, Ralph-C. & Oberhofer, Harald & Winner, Hannes, 2015. "The occurrence of tax amnesties: Theory and evidence," Journal of Public Economics, Elsevier, vol. 125(C), pages 70-82.
    4. Graetz, Michael & Wilde, Louis, 1993. "The decision by strategic nonfilers to participate in income tax amnesties," International Review of Law and Economics, Elsevier, vol. 13(3), pages 271-283, September.
    5. Langenmayr, Dominika, 2017. "Voluntary disclosure of evaded taxes — Increasing revenue, or increasing incentives to evade?," Journal of Public Economics, Elsevier, vol. 151(C), pages 110-125.
    6. Andreoni, James, 1991. "The desirability of a permanent tax amnesty," Journal of Public Economics, Elsevier, vol. 45(2), pages 143-159, July.
    7. repec:gam:jlawss:v:6:y:2017:i:4:p:16-:d:113523 is not listed on IDEAS
    8. Christian, Charles W. & Gupta, Sanjay & Young, James C., 2002. "Evidence on Subsequent Filing From the State of Michigan’s Income Tax Amnesty," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(4), pages 703-721, December.
    9. Justin M. Ross & Neal D. Buckwalter, 2013. "Strategic Tax Planning for State Tax Amnesties," Public Finance Review, , vol. 41(3), pages 275-301, May.
    10. Andreoni, James, 1992. "IRS as loan shark tax compliance with borrowing constraints," Journal of Public Economics, Elsevier, vol. 49(1), pages 35-46, October.
    11. Eric Le Borgne, 2006. "Economic and Political Determinants of Tax Amnesties in the U.S. States," IMF Working Papers 06/222, International Monetary Fund.
    12. Benno Torgler & Christoph A. Schaltegger & Markus Schaffner, 2003. "Is Forgiveness Divine? A Cross-Culture Comparison of Tax Amnesties," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(III), pages 375-396, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Malawi; voluntary compliance; tax amnesty;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_7584. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe). General contact details of provider: http://edirc.repec.org/data/cesifde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.