The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options

Chiumya, Chiza (2007): The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options.

Abstract

This study looks at the dynamics of the Parallel Economy. I estimate the size of the Parallel Economy in Malawi and its relationship with Tax Revenues. The Parallel Economy in Malawi was 12.3%, 23.1% and 17.3% of GDP in the 1970s, 1980s, and 1990s respectively. Income Taxes were a major driver of the Parallel Economy as compared to Import and Consumption Taxes. An increase in Tax Revenue led to an increase in the Parallel Economy and a decrease in tax Revenue led to a decrease in the Parallel Economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Parallel Economy; Official Economy;Tax Revenue
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue

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