Taxes and bribery: The role of monitoring, bargaining power and red tape
This paper investigates the negotiation over bribe and tax payments during the tax collection process in poor countries. We build a simple model where tax officials and firms bargain over bribes to let firms evade part of their taxes. Using a unique dataset on Ugandan firms we test the predictions of the model. We find significant and robust effects of effective tax payments, tax obligations, red tape costs and firm's bargaining power on bribe payments. Taking into account the endogenous relationship between taxes paid and bribes, we find a significant and negative relationship between these two variables. A policy that would increase incentives to pay taxes per employee by 7% could at the same time decrease the level of bribes per employee by at least 1%.
|Date of creation:||Apr 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Sherbrooke, Québec, J1K 2R1|
Phone: (819) 821-7233
Fax: (819) 821-6930
Web page: http://www.gredi.org/home/documents-de-travail
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bernard Gauthier & Ritva Reinikka, 2006.
"Shifting Tax Burdens through Exemptions and Evasion: an Empirical Investigation of Uganda,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 15(3), pages 373-398, September.
- Gauthier, Bernard & Reinikka, Ritva, 2001. "Shifting tax burdens through exemptions and evasion - an empirical investigation of Uganda," Policy Research Working Paper Series 2735, The World Bank.
- Sanyal, Amal & Gang, Ira N & Goswami, Omkar, 2000.
"Corruption, Tax Evasion and the Laffer Curve,"
Springer, vol. 105(1-2), pages 61-78, October.
- Chander, Parkash & Wilde, Louis, 1992. "Corruption in tax administration," Journal of Public Economics, Elsevier, vol. 49(3), pages 333-349, December.
- Laszlo Goerke, 2008.
"Bureaucratic corruption and profit tax evasion,"
Economics of Governance,
Springer, vol. 9(2), pages 177-196, May.
- Basu, Kaushik & Bhattacharya, Sudipto & Mishra, Ajit, 1992. "Notes on bribery and the control of corruption," Journal of Public Economics, Elsevier, vol. 48(3), pages 349-359, August.
When requesting a correction, please mention this item's handle: RePEc:shr:wpaper:12-08. 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: (Luc Savard)
If references are entirely missing, you can add them using this form.