Hüseyin Safa ÜNAL, Jülide YALÇINKAYA KOYUNCU

The Effect of Legal System and Protection of Property Rights on the Size of the Tax Evasion: Panel Analysis

This study seeks to find the impact of legal system and protection of property rights on the size of tax evasion. For this aim, MIMIC model estimates of size of tax evasion as percentage of GDP are utilized. Based on the Swamy’s slope homogeneity test results, Group Mean Panel Dynamic OLS estimation is conducted. Long-run coefficients show that the relationship between tax evasion and impartial courts is negative in average. The relationship between tax evasion and protection of property rights is also negative in average. However, the signs of the relationship vary across economies within the sample.

Anahtar Kelimeler:

Tax Evasion, Impartial Courts, Legal System, Property Rights, Panel Dynamic OLS

The Effect of Legal System and Protection of Property Rights on the Size of the Tax Evasion: Panel Analysis

Keywords:

Tax Evasion, Impartial Courts, Legal System, Property Rights, Panel Dynamic OLS,

PDF

___

Alexeev, M., Janeba, E., & Osborne, S. (2004). Taxation and evasion in the presence of extortion by organized crime. Journal of Comparative Economics, 32(3), 375-387.
Alm, J., & Martinez-Vazquez, J. (2003). Institutions, paradigms, and tax evasion in developing and transition countries. In Public finance in developing and transitional countries: essays in honor of Richard Bird. Richard M. Martinez-Vazquez JorgeAlm James Bird (eds.). 146-178. Cheltenham, UK; Northampton, Ma.: Edward Elgar Publishers.
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The review of economic studies, 47(1), 239-253.
Buehn, A., & Schneider, F. (2016). Size and Development of Tax Evasion in 38 OECD Countries: What do we (not) know?. Journal of Economics and Political Economy, 3(1), 1-11.
Chong, A., & Gradstein, M. (2007). Institutional quality and government efficiency. Inter-American Development Bank Research Department Working paper No: 606.
Cowell, F. A. (1990). Cheating the government: The economics of evasion. MIT Press Books.
Dell’Anno, R. (2009). Tax evasion, tax morale and policy maker's effectiveness. The Journal of Socio-Economics, 38(6), 988-997.
Dreher, A., & Schneider, F. (2010). Corruption and the shadow economy: an empirical analysis. Public Choice, 144(1-2), 215-238.
Fraser Institute (2017). Economic Freedom of the World:2017 Annual Report. Retrieved on 7 February 2018, from https://www.fraserinstitute.org/economic-freedom/dataset
Friedman, E., Johnson, S., Kaufmann, D., & Zoido-Lobaton, P. (2000). Dodging the grabbing hand: the determinants of unofficial activity in 69 countries. Journal of public economics, 76(3), 459-493.
Gwartney, J., Lawson, R., Hall, J., Murphy, R., Czeglédi, P., Fike, F. M., & Newland, C. (2018). Economic Freedom of the World 2018 Annual Report. Fraser Institute.
Hanousek, J., & Palda, F. (2004). Quality of government services and the civic duty to pay taxes in the Czech and Slovak Republics, and other transition countries. Kyklos, 57(2), 237-252.
Mishra, A. (2006). Corruption, hierarchies and bureaucratic structure. In Susan Rose-Ackerman (Ed.), International handbook on the economics of corruption, 189, 216.
Mookherjee, D. (1998). Incentive reforms in developing country bureaucracies: lessons from tax administration. In Annual World Bank Conference on Development Economics 1997. 103-138. World Bank.
Pesaran, M. H., (2003), A Simple Panel Unit Root Test in the Presence of Cross Section Dependence, Cambridge Working Papers in Economics 0346, Faculty of Economics (DAE), University of Cambridge.
Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. CESifo Working Paper No:1229.
Pesaran, M. H. (2015). Testing weak cross-sectional dependence in large panels. Econometric Reviews, 34(6-10), 1089-1117.
Pesaran, M. H., Ullah, A., & Yamagata, T. (2008). A bias‐adjusted LM test of error cross‐section independence. The Econometrics Journal, 11(1), 105-127.
Pyle, D. J. (1989). Tax evasion and the black economy. Springer.
Sandmo, A. (2005). The theory of tax evasion: A retrospective view. National Tax Journal, 643-663.
Sanyal, A., Gang, I. N., & Goswami, O. (2000). Corruption, tax evasion and the Laffer curve. Public Choice, 105(1-2), 61-78.
Schneider, F., and D. H. Enste (2000), Shadow economies: size, causes, andconsequences, The Journal of Economic Literature, 38, 77-114
Schneider, F., & Buehn, A. (2012). Shadow economies in highly developed OECD countries: What are the driving forces?. IZA discussion, paper no. 6891, Institute for the study of labor, University of Bonn, Bonn.
Schnellenbach, J. (2002). Tax morale, Leviathan and the political process: a theoretical approach. Royal Economic Society 2002 Annual Conference, Warwick March 25-27.
Slemrod, J. (2007). Cheating ourselves: The economics of tax evasion. Journal of Economic Perspectives, 21(1), 25-48.
Swamy, P. A. (1970). Efficient inference in a random coefficient regression model. Econometrica: Journal of the Econometric Society, 311-323.
Tanzi, V. (1980), 'The underground economy in the United States: estimates andimplications', Banca Nazionale del Lavoro, 135, 427-53.
Thießen, U. (2010). The shadow economy in international comparison: options for economic policy derived from an OECD panel analysis. International Economic Journal, 24(4), 481-509.
Torgler, B. (2007). Tax compliance and tax morale: A theoretical and empirical analysis. Edward Elgar Publishing.
Torgler, B., & Schneider, F. (2007). Shadow economy, tax morale, governance and institutional quality: a panel analysis. (February 2007). IZA Discussion Paper No. 2563; CESifo Working Paper Series No. 1923.
Torgler, B., & Schneider, F. (2009). The impact of tax morale and institutional quality on the shadow economy. Journal of Economic Psychology, 30(2), 228-245.