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Tax Collection and Corruption in Fiscal Bodies

Author

Listed:
  • Panova Elena
  • Vasin Alexander

Abstract

The present paper considers two types of models of interaction between a tax authority and a group of taxpayers. The first type of model assumes no corruption, and the strategy of the authority is the probability of auditing a taxpayer depending on his/her declared income and other available information. The purpose is to maximise the net tax revenue. The authors determine the optimal strategies for proportional and progressive taxation, assuming risk neutrality amongst taxpayers. The second type of model permits the bribing of an auditor by a taxpayer. The authors determine the optimal probabilities of audit and review by the tax authority and then study the comparative statics of net revenue with respect to the tax rate and penalties for poor auditing.

Suggested Citation

  • Panova Elena & Vasin Alexander, 2000. "Tax Collection and Corruption in Fiscal Bodies," EERC Working Paper Series 99-10e, EERC Research Network, Russia and CIS.
    • Handle: RePEc:eer:wpalle:99-10e
    as

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    References listed on IDEAS

    as
    1. Sanchez, Isabel & Sobel, Joel, 1993. "Hierarchical design and enforcement of income tax policies," Journal of Public Economics, Elsevier, vol. 50(3), pages 345-369, March.
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    3. Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February.
    4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    5. Chander, Parkash & Wilde, Louis, 1992. "Corruption in tax administration," Journal of Public Economics, Elsevier, vol. 49(3), pages 333-349, December.
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    More about this item

    Keywords

    Russia; transition; tax enforcement; corruption; game-theory models;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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