Re-Assessing the Merits of Measuring Tax Evasions through Surveys: Evidence from Serbian Firms

31 Pages Posted: 1 Aug 2013

See all articles by Thorben Kundt

Thorben Kundt

University of the German Federal Armed Forces - Department of Economics

Florian Misch

ZEW – Leibniz Centre for European Economic Research

Birger Nerre

Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) GmbH

Date Written: July 15, 2013

Abstract

This paper addresses the major weakness of measuring tax evasion through business and household surveys, namely the reluctance of respondents to answer truthfully due to the threat of disclosure. First, we assess the merits of a novel questioning method to gather information about tax evasion by means of business surveys. This approach allows estimating the prevalence of tax evasion, but it does not allow identifying whether the individual firm engages in tax evasion or not, therefore providing incentives for survey participants to answer truthfully. Second and contrary to most other business surveys, we differentiate between two common modes of tax evasion, namely underreporting of sales and informal supplements to official wages (‘envelope wages’). Using evidence from Serbia, we show that the estimated share of firms which underreport sales and wages, respectively, by at least 10% is higher under the crosswise model compared to the case when conventional questioning methods applied in business surveys such as the World Bank Enterprise Surveys are used. However, the difference is only significant with respect to sales. These results appear to be robust to a number of modifications, and we explore various potential causes that lead to these results.

Keywords: tax evasion, shadow economy, measurement, developing countries

JEL Classification: H20, E62

Suggested Citation

Kundt, Thorben and Misch, Florian and Nerre, Birger, Re-Assessing the Merits of Measuring Tax Evasions through Surveys: Evidence from Serbian Firms (July 15, 2013). ZEW - Centre for European Economic Research Discussion Paper No. 13-047. Available at SSRN: https://ssrn.com/abstract=2304645 or http://dx.doi.org/10.2139/ssrn.2304645

Thorben Kundt

University of the German Federal Armed Forces - Department of Economics ( email )

Holstenhofweg 85
Hamburg, 22043
Germany

Florian Misch (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Birger Nerre

Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) GmbH ( email )

Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
44
Abstract Views
905
PlumX Metrics