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Effects of institutional history and leniency on collusive corruption and tax evasion


Buckenmaier, Johannes; Dimant, Eugen; Mittone, Luigi (2018). Effects of institutional history and leniency on collusive corruption and tax evasion. Working paper series / Department of Economics 295, University of Zurich.

Abstract

We investigate the effects of an institutional mechanism that incentivizes taxpayers to blow the whistle on collusive corruption and tax compliance. We explore this through a formal leniency program. In our experiment, we nest collusive corruption within a tax evasion framework. We not only study the effect of the presence of such a mechanism on behavior, but also the dynamic effect caused by the introduction and the removal of leniency. We find that in the presence of a leniency mechanism, subjects collude and accept bribes less often while paying more taxes, but there is no increase in bribe offers. Our results show that the introduction of the opportunity to blow the whistle decreases the collusion and bribe acceptance rate, and increases the collected tax yield. It also does not encourage bribe offers. In contrast, the removal of the institutional mechanism does not induce negative effects, suggesting a positive spillover effect of leniency that persists even after the mechanism has been removed.

Abstract

We investigate the effects of an institutional mechanism that incentivizes taxpayers to blow the whistle on collusive corruption and tax compliance. We explore this through a formal leniency program. In our experiment, we nest collusive corruption within a tax evasion framework. We not only study the effect of the presence of such a mechanism on behavior, but also the dynamic effect caused by the introduction and the removal of leniency. We find that in the presence of a leniency mechanism, subjects collude and accept bribes less often while paying more taxes, but there is no increase in bribe offers. Our results show that the introduction of the opportunity to blow the whistle decreases the collusion and bribe acceptance rate, and increases the collected tax yield. It also does not encourage bribe offers. In contrast, the removal of the institutional mechanism does not induce negative effects, suggesting a positive spillover effect of leniency that persists even after the mechanism has been removed.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C92, D02, D73, H26, K42
Uncontrolled Keywords:Collusive bribery, institutions, tax compliance, leniency, spillover, Korruption, Steuervermeidung, Besteuerungsverfahren, Steuermoral, Whistleblowing
Language:English
Date:August 2018
Deposited On:07 Aug 2018 15:55
Last Modified:27 Nov 2020 07:29
Series Name:Working paper series / Department of Economics
Number of Pages:32
ISSN:1664-7041
OA Status:Green
Official URL:http://www.econ.uzh.ch/static/wp/econwp295.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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