A tax amnesty can be a useful tax policy tool when exploited in exceptional circumstances. Amnesties can also be used systematically as a discriminatory mechanism to improve the efficiency or even the equity of the tax system, but only if government commitment to enforcing tax law is credible....

We consider perfectly anticipated periodic tax amnesties characterized by a tax rate lower than the ordinary one and used by a monopolistic government to maximize net fiscal revenue. We model tax amnesties as a form of intertemporal price discrimination. It turns out that, under certain...