The Deterrent Effect of Whistleblowing on Tax Collections

32 Pages Posted: 5 Sep 2018

See all articles by Eli Amir

Eli Amir

Tel Aviv University

Adi Lazar

Ariel University

Shai Levi

Tel Aviv University

Date Written: August 25, 2018


Many countries use tax-related whistleblowing programs, but the evidence on these programs suggests information provided by whistleblowers yields modest tax collections. However, when every citizen could become a whistleblower, deterrence from tax evasion can by itself increase tax collections. We find that tax collections significantly increased after the introduction of the whistleblowing mechanism in Israel in February 2013, although this mechanism directly yielded little or no tax collections. In support of the hypothesis that deterrence led to the increase in tax collections, we find that collections increased in industries with high tax-evasion risk, but not in industries with low tax-evasion risk. Furthermore, the increase in tax collections occurred in corporations, where the timing and magnitude of tax payments are more discretionary, but not from employees, for whom employers directly deduct taxes. Eventually, following reports that the whistleblowing mechanism is ineffective, deterrence diminished and tax collections decreased, suggesting the deterrence effect was temporary.

Keywords: whistleblowing, tax evasion, deterrence

Suggested Citation

Amir, Eli and Lazar, Adi and Levi, Shai, The Deterrent Effect of Whistleblowing on Tax Collections (August 25, 2018). European Accounting Review, Forthcoming, Available at SSRN:

Eli Amir

Tel Aviv University ( email )

312 Recanati Bldg.
69978 Tel Aviv
+972 3 640-8510 (Phone)
+972 3 640-7738 (Fax)

Adi Lazar

Ariel University ( email )


Shai Levi (Contact Author)

Tel Aviv University ( email )

Tel Aviv, 69978

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