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Optimal Sales Tax Rebates and Tax Enforcement Consumers


  • Marcelo Arbex

    () (Department of Economics, University of Windsor)

  • Enlinson Mattos

    () (São Paulo School of Economics, Getulio Vargas Foundation)


We study an optimal commodity taxation problem and show that consumers have an important role as tax enforcers. Firms evade taxes by not issuing sales receipts. Requesting receipts is costly for buyers but forces ?rms to remit taxes to the government. To compensate buyers, the government o¤ers a tax rebate, which has a non-trivial income e¤ect and modi?es the traditional "Ramsey equation". Tax-enforcement policies a¤ect buyers?allocations directly and via the standard changes in the good?s price. The optimal policies depend on buyers? auditing and ?rms?concealment technologies. Welfare is higher if consumer auditing is the only tax enforcement policy.

Suggested Citation

  • Marcelo Arbex & Enlinson Mattos, 2013. "Optimal Sales Tax Rebates and Tax Enforcement Consumers," Working Papers 1302, University of Windsor, Department of Economics.
  • Handle: RePEc:wis:wpaper:1302

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    References listed on IDEAS

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    Blog mentions

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    1. The tax payer as a tax enforcer
      by Economic Logician in Economic Logic on 2013-05-15 19:25:00


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    Cited by:

    1. Marcelo Arbex & Enlinson Mattos & Laudo M. Ogura, 2015. "Welfare and Inequality with Hard-to-Tax Markets," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 71(3), pages 371-384, September.

    More about this item


    Optimal Taxation; Indirect Tax Evasion; Tax Enforcement and Auditing.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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