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Tax Revenue Prediction under Condition of Imperfect Control over Tax-Collecting Authority
[Predikce daňových příjmů v podmínkách nedokonalé kontroly daňových úřadů]

Author

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  • Stanislav Klazar

Abstract

Public revenue forecasts should be accurate and unbiased, it means they should be the best estimates (in statistical view) of expected receipts. This paper analyzes the possible reasons for biased (overestimated or underestimated) tax revenue forecasts. Our modification of Danninger's theoretical model demonstrates that systematically (over a long period) and intentionally (deliberately) biased revenue forecasts can be result of the government's (principal's) attempt to increase the effort of tax-collecting authority (agent) to collect revenue. We carry out empirical analysis to test one of the model implications - relation between effort and relative grow of tax revenue. We use data from the years 2004 and 2005 for Corporate Income Tax collected in 16 tax-collecting authorities.

Suggested Citation

  • Stanislav Klazar, 2006. "Tax Revenue Prediction under Condition of Imperfect Control over Tax-Collecting Authority [Predikce daňových příjmů v podmínkách nedokonalé kontroly daňových úřadů]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2006(3), pages 48-62.
    • Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:86:p:48-62
    DOI: 10.18267/j.aop.86
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    References listed on IDEAS

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    1. Feenberg, Daniel R, et al, 1989. "Testing the Rationality of State Revenue Forecasts," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 300-308, May.
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    6. Ms. Annette J Kyobe & Mr. Stephan Danninger, 2005. "Revenue Forecasting—How is it done? Results from a Survey of Low-Income Countries," IMF Working Papers 2005/024, International Monetary Fund.
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    12. Mr. Stephan Danninger, 2005. "Revenue Forecasts as Performance Targets," IMF Working Papers 2005/014, International Monetary Fund.
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    Cited by:

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    More about this item

    Keywords

    revenue forecast; principal; agent; biased forecast; agency theory;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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