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Misreporting in the Norwegian business cash support scheme

Author

Listed:
  • Dinara Alpysbayeva

    (Norwegian University of Life Sciences)

  • Annette Alstadsæter

    (Norwegian University of Life Sciences)

  • Wojciech Kopczuk

    (Columbia University)

  • Simen Markussen

    (Norwegian University of Life Sciences
    Ragnar Frisch Centre for Economic Research)

  • Oddbjørn Raaum

    (Norwegian University of Life Sciences
    Ragnar Frisch Centre for Economic Research)

Abstract

We analyze the reporting response to an ambitiously targeted government support scheme for Norwegian businesses at the very start of the Coronavirus crisis in 2020. Our empirical design is based on cross-checking self-reported data in the applications for support with administratively reported data used for VAT. We find strong evidence that strategic misreporting was present but conclude that its remaining quantitative extent after enforcement actions already taken by the tax authorities was relatively small. Firms tend to misreport 4% more often than expected, and the actual support paid out was 5% higher than it should have been. We discuss possible reasons for the relatively limited extent of non-compliance and more general lessons for the design of transfer programs.

Suggested Citation

  • Dinara Alpysbayeva & Annette Alstadsæter & Wojciech Kopczuk & Simen Markussen & Oddbjørn Raaum, 2024. "Misreporting in the Norwegian business cash support scheme," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(6), pages 1463-1493, December.
    • Handle: RePEc:kap:itaxpf:v:31:y:2024:i:6:d:10.1007_s10797-024-09857-6
    DOI: 10.1007/s10797-024-09857-6
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    References listed on IDEAS

    as
    1. Annette Alstadsæter & Julie Brun Bjørkheim & Wojciech Kopczuk & Andreas Økland, 2020. "Norwegian and U.S. Policies Alleviate Business Vulnerability Due to the COVID-19 Shock Equally Well," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 805-828, September.
    2. Katherine Meckel, 2020. "Is the Cure Worse Than the Disease? Unintended Effects of Payment Reform in a Quantity-Based Transfer Program," American Economic Review, American Economic Association, vol. 110(6), pages 1821-1865, June.
    3. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2019. "Tax Evasion and Inequality," American Economic Review, American Economic Association, vol. 109(6), pages 2073-2103, June.
    4. Manasi Deshpande & Yue Li, 2019. "Who Is Screened Out? Application Costs and the Targeting of Disability Programs," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 213-248, November.
    5. Henrik Jacobsen Kleven & Wojciech Kopczuk, 2011. "Transfer Program Complexity and the Take-Up of Social Benefits," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 54-90, February.
    6. Michael Smart & Matthew Kronberg & Josip Lesica & Danny Leung & Huju Liu, 2023. "The Employment Effects of a Pandemic Wage Subsidy," CESifo Working Paper Series 10218, CESifo.
    7. David Autor & David Cho & Leland D. Crane & Mita Goldar & Byron Lutz & Joshua Montes & William B. Peterman & David Ratner & Daniel Villar & Ahu Yildirmaz, 2022. "The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did It Go There?," Journal of Economic Perspectives, American Economic Association, vol. 36(2), pages 55-80, Spring.
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    More about this item

    Keywords

    Government support programs; Policy design; Cash transfers; Firm behavior; Misreporting; COVID-19;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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