Tax Compliance as a Social Norm and the Deterrent Effect of Investigations

Marisa Ratto (), Richard Thomas and David Ulph ()

The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK

Abstract: In this paper we focus on the effects of investigations on tax compliance. In a very general model we explain the direct and indirect effects of investigations and analyse taxpayers’ response to an increase in the probability of audit when tax compliance is a social norm. We define the different elements that determine the impact of audits on compliance and show that if tax compliance is a social norm in the relevant community there is an additional effect arising because of social norm considerations. The behavioural response of taxpayers to an increase in the audit rate is stronger. Our Findings help explain seemingly contradictory results that emerge from the empirical evidence.

Keywords: tax evasion; social norm; opportunities to evade; optimal audit rule (search for similar items in EconPapers)
JEL-codes: D81 H26 H30 K42 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2005-07
New Economics Papers: this item is included in nep-law, nep-pbe, nep-pub and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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