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The Design of Commodity Taxes in the Presence of Tax Evasion with Illustrative Evidence From India

Citation

Ray, R, The Design of Commodity Taxes in the Presence of Tax Evasion with Illustrative Evidence From India, Public Finance Review, 26, (5) pp. 503-518. ISSN 0048-5853 (1998) [Refereed Article]

DOI: doi:10.1177/109114219802600505

Abstract

This article analyzes the impact of tax evasion in the optimal commodity tax model with heterogeneous individuals. A recent model of indirect tax evasion is applied to the many-person case. Indian data show that sales underreporting has a major impact on tax design, and makes the optimal commodity taxes more redistributive. Thus, tax evasion plays a role similar to that of inequality aversion in traditional tax calculations. The tax evasion parameter is endogenized and shown to be nonuniform across items. The article also introduces a framework that allows simultaneous analysis of commodity and income tax evasion. © 1998, Sage Publications. All rights reserved.

Item Details

Item Type:Refereed Article
Research Division:Economics
Research Group:Applied Economics
Research Field:Macroeconomics (incl. Monetary and Fiscal Theory)
Objective Division:Economic Framework
Objective Group:Macroeconomics
Objective Field:Taxation
Author:Ray, R (Professor Ranjan Ray)
ID Code:14305
Year Published:1998
Deposited By:Economics and Finance
Deposited On:1998-08-01
Last Modified:2011-08-09
Downloads:0

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