Munich Personal RePEc Archive

Corruption and tax evasion an optimal policy

Jellal, Mohamed and Bouzahzah, Mohamed (2012): Corruption and tax evasion an optimal policy.

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Abstract

Under Principal-Agent-Supervisor paradigm, we examine in this paper how a tax collection agency changes optimal schemes in order to lessen the occurrence of corruption between the tax collector and the taxpayer. The Principal, who maximizes the expected net fiscal revenue, reacts by decreasing tax rates when the supervisor is likely to engage in corrupt transaction with taxpayer.The combat against collusion and corruption may explain the greater reliance on indirect taxes than on direct taxes both in developed and developing countries like Morocco.

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