Abstract
AbstractThis article presents a new conceptual framework for research into tax fraud and law enforcement. Informed by research approaches from across tax law, public economics, criminology, criminal justice, economics of crime, and regulatory theory, it assesses the effectiveness, and the legitimacy, of current approaches to combating tax fraud, bringing new dimensions to previously identified trends in crime control. It argues that, whilst the last decade has witnessed a significant intensification of measures that purportedly target tax fraud, preference has been consistently given to enforcement measures that maximize revenue gains rather than combat the fraud itself, even where the effect is to aggravate the non‐revenue costs of tax fraud. These developments demonstrate a significant shift from tax fraud suppression to tax fraud management. The article concludes that this shift not only undermines tax equity and overall tax compliance, but also leads to selective tax enforcement, thus representing a significant risk to the rule of law.
Highlights
Tax fraud is, by its very nature, difficult to measure
Whilst the last decade has witnessed a significant intensification of measures that purportedly target tax fraud, preference has been consistently given to enforcement measures that maximize revenue gains rather than combat the fraud itself, even where the effect is to aggravate the non-revenue costs of tax fraud
The last decade has witnessed the significant intensification of anti-fraud policy both within Europe and elsewhere, with an upsurge in both legislative and administrative measures that purportedly target different types of tax fraud
Summary
By its very nature, difficult to measure. tax administrations commonly present estimations of the levels of fraud, the. This article presents a novel conceptual framework for understanding the tax fraud phenomenon, informed by research insights from across various disciplines – tax law, public economics, criminology, criminal justice, economics of crime, and regulatory theory – thereby breaking with the single- or dual-discipline orthodoxy that has often characterized previous studies It reflects upon both the effectiveness and the legitimacy of antifraud practices by establishing how, through prioritizing short-term revenue gains over the elimination of tax fraud, they: unavoidably lead to selective tax enforcement; damage the neutrality and equity of overall tax systems; decrease the long-term efficiency of those same tax systems, even where there are short-term efficiency gains; and, undermine the rule of law.
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