How to Incentivize Tax Compliance when Households Demand Services? What Works (Better) and General Limitations
Burgstaller L, Necker S (2023)
Publication Type: Journal article
Publication year: 2023
Journal
Book Volume: 24
Pages Range: 38 - 41
Journal Issue: 1
Abstract
During the recent crises, governments around the world have spent large amounts of public funds to limit the impact of economic downturns on citizens and corporations. The resulting pressure on public funds is highlighting the crucial need to improve tax compliance. For instance, in the European Union, Member States lost an estimated 134 billion EUR in Value-Added Tax (VAT) in 2019, partly because of VAT fraud and evasion (European Commission 2021). Previous research shows that taxes are less likely to be evaded if governments can observe transactions (e.g., Kleven et al. 2011; Pomeranz 2015; Naritomi 2019). Thus, withholding taxes and verifiable documents are central instruments for successful tax collection. However, although the VAT provides an incentive for firms to request an invoice in business to-business transactions, the same does not exist in business-to-consumer transactions. Consumers usually do not benefit financially from asking for an invoice. Yet, they may receive a price discount if they agree to proceed without a paper trail (e.g., European Commission 2014). The incentives to evade collaboratively are particularly high when sellers and consumers interact directly, such as in the provision of services to households.
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Germany (DE)How to cite
APA:
Burgstaller, L., & Necker, S. (2023). How to Incentivize Tax Compliance when Households Demand Services? What Works (Better) and General Limitations . econPol Forum, 24(1), 38 - 41.
MLA:
Burgstaller, Lilith, and Sarah Necker. "How to Incentivize Tax Compliance when Households Demand Services? What Works (Better) and General Limitations ." econPol Forum 24.1 (2023): 38 - 41.
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