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Mr. Eric Le Borgne and Ms. Katherine Baer

Abstract

Tax amnesties remain as popular as ever as a tool for raising revenue and increasing tax compliance. International experience, however, shows that the costs of tax amnesty programs often exceed the programs’ benefits. This paper weighs the advantages and disadvantages of tax amnesties, drawing on results from the theoretical literature, econometric evidence, and selected country and U.S. state case studies. The authors conclude that “successful” tax amnesties are the exception rather than the norm. Improvements in tax administration are the essential ingredient in addressing the main problems that tax amnesties seek to address. Indeed, the most successful amnesty programs rely on improving the tax administration’s enforcement capacity. ?Given the potential drawbacks of tax amnesties, a few alternative measures are discussed.

Mr. Eric Le Borgne and Ms. Katherine Baer

, ex post, to decide whether to offer an amnesty or not depending on whether revenue targets have been achieved or not. Citizens, given the tax environment chosen by the government, decide whether to comply with the tax code or not. For those who do not comply, an amnesty, if provided, is an opportunity to reassess their choices in light of the (potentially) new tax environment that the government is announcing, or of unexpected changes in their own situation. The tax-evasion decision is a trade-off between the benefits of tax evasion and the costs of detection

Ms. Era Dabla-Norris, Mr. Mark Gradstein, Fedor Miryugin, and Florian Misch
The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country’s development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion.
Mr. Michael Keen, Mr. Alexander D Klemm, and Anna Ivanova
Russia dramatically reduced its higher rates of personal income tax (PIT) in 2001 establishing a single marginal rate at the low level of 13 percent. In the following year, real revenue from the PIT actually increased by about 26 percent. This 'flat tax' experience has attracted much attention (and emulation) among policymakers, making it perhaps the most important tax reform of recent years. But it has been little studied. This paper asks whether the strong revenue performance of the PIT was itself a consequence of this reform, using both macro evidence and, in particular, micro-level data on the experiences of individuals and households affected by the reform to varying degrees. It concludes that there is no evidence of a strong supply side effect of the reform. Compliance, however, did improve quite substantially-by about one third according to our estimates-though it remains unclear whether this was due to the parametric reforms or to accompanying changes in enforcement.
International Monetary Fund
This paper presents the staff report for Greece’s request for an Extended Arrangement under the Extended Fund Facility. The Greek economy fell into deep twin structural deficits after euro adoption. Easy access to financing at low interest rates fuelled rapid borrowing by the private and public sectors. Between euro accession in 2001 and 2009, private sector credit almost doubled in percent of GDP, financed mainly through the domestic banking system. Massive sovereign borrowing from international bond markets pushed government debt from 100 percent of GDP to about 130 percent of GDP during this timeframe.
Ms. Era Dabla-Norris, Mr. Mark Gradstein, Fedor Miryugin, and Florian Misch

.g., micro-enterprises). See also Kanbur (2017). 4 Alm et al. (2016) show how the potential for bribery of tax officials affect’s a firm’s tax evasion decisions. Kleven et. al (2016) develop a model which shows that firms’ use of business records increases as it hires more employees. They show that the government may be able to enforce higher tax compliance even in the presence of a low threat of audit due to the increased ease of whistle-blowing as the firm grows. 5 In Appendix 2, we extend the model to consider the case where firms can partially evade

Mr. Michael Keen, Mr. Alexander D Klemm, and Anna Ivanova

looking only at taxes levied on the employee. This case is weak, however, as there is no strong reason to believe that contracts in Russia are particularly sticky and because data were in any event collected in the last quarter of the year, allowing significant time for adjustments in response to the reform. Furthermore, to the extent that tax evasion decisions are taken jointly by employer and employee, they will be affected in the same way by each tax. Therefore, while we report both results focusing on revenues from the PIT and from the PIT and social insurance

International Monetary Fund

This paper presents the staff report for Greece’s request for an Extended Arrangement under the Extended Fund Facility. The Greek economy fell into deep twin structural deficits after euro adoption. Easy access to financing at low interest rates fuelled rapid borrowing by the private and public sectors. Between euro accession in 2001 and 2009, private sector credit almost doubled in percent of GDP, financed mainly through the domestic banking system. Massive sovereign borrowing from international bond markets pushed government debt from 100 percent of GDP to about 130 percent of GDP during this timeframe.