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Please use this identifier to cite or link to this item: http://hdl.handle.net/10202/216

Title: Fiscal corruption: A vice or a virtue?
Authors: Fjeldstad, Odd-Helge
Tungodden, Bertil
Keywords: Corruption
Tax evasion
Tax administration
Incentives
Issue Date: 2001
Publisher: Chr. Michelsen Institute
Series/Report no.: CMI Working paper
WP 2001: 13
Abstract: Recent literature on tax administration in poor countries suggests that inducing more fiscal corruption may contribute to reducing tax evasion and increasing tax revenues. But does such an intriguing paradox justify policies that stimulate corruption? Our answer is no, and this note puts forward three arguments to support our view. First, while an increase in corruption may raise revenues in the short run, in general the opposite will be the case in the longer run. Second, the instrumental value of reducing corruption goes far beyond its effects on tax evasion and tax revenues. Accepting corruption as a policy strategy to increase tax revenues may undermine values of democracy and good governance. Third, eliminating corruption should be considered an end in itself. Thus, contrary to recent suggestions on incentive reforms in tax administration, the reasonable starting point for policy debates in this area should still be that an increase in fiscal corruption is not an appropriate instrument for raising tax revenues. Sustained development cannot grow from an institutional framework that fosters corruption and extra-legal tax enforcement.
URI: http://hdl.handle.net/10202/216
ISBN: 82-90584-98-9
ISSN: 0804-3639
Appears in Collections:CMI Collection (Reports, Working Papers, Articles etc.)

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