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Informal Sector Heterogeneity And Tax Compliance In Cameroon

Author

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  • Mélaine YOFFO
  • Jean François Brun

Abstract

Decision of tax payments in the informal sector does not depend only on economic and personal characteristics of the operators. This is the main finding the study wants to achieve. In fact as revealed social psychology scientits, every behavior take place in a specific environment where cultural, social or physical aspects can affect it (Godin, 2009). This generated interactions between environment and behaviour. So it’s remained complicated to study the determinant of the behaviour omitting this « environmental » dimension. Literature on determinants of payments in the informal sector generally doesn’t access this thesis. Here we analyze the relevance of spillover effects in the informal sector tax payment process. We focus on the effects inferred by the social interactions on the decision of paying or not taxes. The methodology of research is a Probit Spatial Durbin Model which permit to test the spatial dependance on non-linear models. We implemented it on microdata of Cameroon informal sector take into the Survey at the Employment and the informal sector 2010. Empirical results suggest a spatial dependence between the decisions of payments within the informal sector. In the case of " Constrained Gazelles " or "Top-performer "– most successful enterprises with the highest level and productivity of capital- decisions of tax payments influence positively and significantly those of the other firms. However, for companies doing survival activities, a dissuasive but not significant effect is observed.

Suggested Citation

  • Mélaine YOFFO & Jean François Brun, 2016. "Informal Sector Heterogeneity And Tax Compliance In Cameroon," EcoMod2016 9740, EcoMod.
  • Handle: RePEc:ekd:009007:9740
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