Essays on value added tax evasion and tax amnesty programs

Abstract

Using a panel data from 1972 to 1999, the first essay of this dissertation analyzes howVAT evasion has changed as reliance on VAT in the sample of 25 OECD countriesincreased. The VAT ratio and VAT share are used as alternative measures of VATreliance as independent variables. The results show that an increase in the VAT ratio andVAT share decreases VAT evasion. Overall, the results are quite robust to the variousregression specifications.Proponents argue that tax amnesties raise revenues both in the short run and thelong run, by bringing former non-filers back into the tax system. Opponents contend thatamnesties produce little short-run revenue and weaken incentives for long-run taxcompliance. Over the last 23 years, 27 states offered tax amnesties for a second or thirdtime. While previous research has estimated the impact of specific tax amnesties, nonehave estimated how the impact changes when they are offered repeatedly. The resultsfrom the second essay of this dissertation show that these additional tax amnestiesgenerate less short-run revenue than predecessors and tend to magnify revenue lossesassociated with disincentives for long-run tax compliance.The third and the last essay utilizes time series methods to analyze the Colorado,Maine and West Virginia tax amnesties, using quarterly total tax revenue data for theperiod from 1980 to 2002. The results show that the Colorado amnesty had no short runor long run impact on tax collections. At the same time, the results also show that theMaine and West Virginia tax amnesties raised revenues in the short run but that revenuecollections actually fell in these states in the long run.