Income tax credits for consumer services: A tool for tackling VAT evasion?

• 成果类型: Article
• 署名作者: Buettner, Thiess; Madzharova, Boryana; Zaddach, Orlando
• 署名单位: University of Erlangen Nuremberg; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2023.104836
• 发表日期: 2023
• 关键词: tax evasion; Value-added tax; Income tax credit; Third-party reporting

摘要

This paper analyzes the effects of an income tax credit for hard-to-tax consumer services on evasion of the value-added-tax (VAT). Based on the individual tax files of the universe of VAT payers in Germany, our analysis shows that harnessing incentives for consumers through tax credits fosters firms' compli-ance with VAT by bringing in an element of third-party reporting at the last VAT stage. Our results point at strong stimulating effects of the introduction of the tax credit on reported sales as well as on the ratio of reported sales to inputs and we find limited price effects. While two thirds of the revenue losses in the income tax are recovered by an increase in VAT revenues, at least a quarter and up to a half of the revenue gain is associated with a response at the VAT evasion margin. The policy thus fosters considerable formal-ization effects.(c) 2023 Published by Elsevier B.V.