Full movement from the destination principle to the origin principle would lead to changes in VAT revenues in EU countries. Hence a clearing mechanism is necessary to rectify such imbalances. To estimate the relevance of VAT evasion this study quantifies the annual amounts of hypothetical VAT...

This survey presents the various methods to estimate the size of the shadow economy, their strengths and weaknesses and the estimation results. The purpose of the survey is threefold. Firstly, it demonstrates that no ideal method to estimate the size and development of the shadow economy exists....

This paper aims to provide a thorough theoretical formalisation of the ‘slippery slope’ framework in order to highlight the effects and the macroeconomic implications of the dynamics between power and trust. In particular, the proposed model is able to differentiate between coercive and...

The recent and growing literature which has extended the use of search and matching models even to the housing market does not use the free entry or zero-profit assumption as a key condition for solving the equilibrium of the model. This is because a straightforward adaptation of the basic...

Several studies examine the effect of tax rates on households’ labor supply decisions in attempts to account for observed differences in work hours across countries. Interestingly, these studies fail to consider a fundamental action associated with taxation: tax evasion. This paper introduces,...

This paper aims to formalise both the role of trust (in) and power (of) tax authorities as major determinants of tax compliance, and the interplay between trust and power and its influence on tax climate and overall tax compliance. Unlike the related literature that studies the role of the...

We contribute to the debate on how to assess the size of the shadow economy by proposing a reinterpretation of the traditional Currency Demand Approach (CDA) a là Tanzi. In particular, we introduce three main innovations. First, we take a direct measure of cash transactions (the flow of cash...

The history of mankind as a whole has proven that every time they appear and show major economic crisis, global exponential stage for development appear to various phenomena of crime, of poverty amid ancestral human population and the evil inclinations the detriment of his neighbor, for selfish...

This paper incorporates tax morale into a search and matching model of equilibrium unemployment, with on-the-job search, extended to both the irregular sector and entrepreneurship. Tax morale is modelled as a social norm for tax compliance which renders evasion costly. The moral cost of tax...

The multitude of duties which the fiscal regulations impose on the tax payers, as well as the burden of these duties have always stimulated tax payer’s ingeniousness to invent solutions to elude the fiscal duties. Tax evasion is the logic result of the faults and inadvertencies of an imperfect...