Language:
English
Pages:
Online-Ressource (1 online resource (42 p.))
Edition:
Online-Ausg. World Bank E-Library Archive
Parallel Title:
Waly, Waly Tax Evasion, Corruption, and the Remuneration of Heterogeneous Inspectors
Keywords:
Bank
;
Corruption
;
Debt Markets
;
Discretion
;
Economic Theory and Research
;
Emerging Markets
;
Finance and Financial Sector Development
;
Financial Literacy
;
Income Tax
;
Insurance and Risk Mitigation
;
Law and Development
;
Macroeconomics and Economic Growth
;
Poverty Impact Evaluation
;
Poverty Reduction
;
Private Sector Development
;
Public Sector Corruption and Anticorruption Measures
;
Strategy
;
Tax
;
Tax Administration
;
Tax Base
;
Tax Collection
;
Tax Compliance
;
Tax Enforcement
;
Tax Evasion
;
Tax Law
;
Tax Liabilities
;
Tax Liability
;
Tax Policies
;
Tax Receipts
;
Tax Revenue
;
Tax Revenues
;
Taxation and Subsidies
;
Taxes
;
Taxpayers
;
Bank
;
Corruption
;
Debt Markets
;
Discretion
;
Economic Theory and Research
;
Emerging Markets
;
Finance and Financial Sector Development
;
Financial Literacy
;
Income Tax
;
Insurance and Risk Mitigation
;
Law and Development
;
Macroeconomics and Economic Growth
;
Poverty Impact Evaluation
;
Poverty Reduction
;
Private Sector Development
;
Public Sector Corruption and Anticorruption Measures
;
Strategy
;
Tax
;
Tax Administration
;
Tax Base
;
Tax Collection
;
Tax Compliance
;
Tax Enforcement
;
Tax Evasion
;
Tax Law
;
Tax Liabilities
;
Tax Liability
;
Tax Policies
;
Tax Receipts
;
Tax Revenue
;
Tax Revenues
;
Taxation and Subsidies
;
Taxes
;
Taxpayers
Abstract:
July 2000 - Wane develops a general model for addressing the question of how to compensate tax inspectors in an economy where corruption is pervasive-a model that considers the existence of strategic transmission of information. Most of the literature on corruption assumes that the taxpayer and the tax inspector jointly decide on the income to report, which also determines the size of the bribe. In contrast, Wane's model considers the more realistic case in which the taxpayer unilaterally chooses the income to report. The tax inspector cannot change the report and is faced with a binary choice: either he negotiates the bribe on the basis of the income report or he denounces the tax evader and therefore renounces the bribe. In his model, the optimal compensation scheme must take into account the strategic interaction between taxpayers and tax inspectors: · Pure tax farming (paying tax inspectors a share of their tax collections) is optimal only when all tax inspectors are corruptible. · When there are both honest and corruptible inspectors, the optimal compensation scheme lies between pure tax farming and a pure wage scheme. · Paradoxically, when inspectors are hired beforehand, it may be optimal to offer contracts that attract corruptible inspectors but not honest ones. This paper-a product of Public Economics, Development Research Group-is part of a larger effort in the group to understand how the existence of corruption affects the remuneration schemes tax administrations should offer their inspectors
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