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Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research

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  • Joshi, Anuradha
  • Prichard, Wilson
  • Heady, Christopher

Abstract

This paper reviews the literature on taxation of the informal economy, taking stock of key debates and drawing attention to recent innovations. Conventionally, the debate on whether to tax has frequently focused on the limited revenue potential, high cost of collection, and potentially adverse impact on small firms. Recent arguments have increasingly emphasised the more indirect benefits of informal taxation in relation to economic growth, broader tax compliance, and governance. More research is needed, we argue, into the relevant costs and benefits for all, including quasi-voluntary compliance, political and administrative incentives for reform, and citizen-state bargaining over taxation.

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  • Joshi, Anuradha & Prichard, Wilson & Heady, Christopher, 2014. "Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research," Working Papers 13663, Institute of Development Studies, International Centre for Tax and Development.
  • Handle: RePEc:idq:ictduk:13663
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    1. repec:bla:devpol:v:37:y:2019:i:1:p:47-66 is not listed on IDEAS
    2. Mukherjee, Sacchidananda & Rao, R. Kavita, 2017. "Determinants of Registration of Unincorporated Enterprises under State Value Added Tax Act in India," MPRA Paper 81236, University Library of Munich, Germany.
    3. Vitor Gaspar & Laura Jaramillo & Philippe Wingender, 2016. "Tax Capacity and Growth; Is there a Tipping Point?," IMF Working Papers 16/234, International Monetary Fund.
    4. International Monetary Fund, 2016. "Albania; Selected Issues," IMF Staff Country Reports 16/143, International Monetary Fund.
    5. Richard M. Bird, 2015. "Fiscal Decentralization and Decentralizing Tax Administration: Different Questions, Different Answers," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1509, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Christine Lewis, 2019. "Raising more public revenue in Indonesia in a growth - and equity-friendly way," OECD Economics Department Working Papers 1534, OECD Publishing.
    7. Prichard, Wilson, 2016. "Electoral Competitiveness, Tax Bargaining and Political Incentives in Developing Countries: Evidence from Political Budget Cycles Affecting Taxation," Working Papers 13713, Institute of Development Studies, International Centre for Tax and Development.
    8. Mukherjee, Sacchidananda & Rao, R. Kavita, 2015. "Factors Influencing Unincorporated Enterprises to Register under Value Added Tax (VAT): An Analysis with Enterprises Survey Data," Working Papers 15/145, National Institute of Public Finance and Policy.

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