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The inextricable association of measurement errors and tax evasion as examined through a microanalysis of survey data matched with fiscal data: a case study

Statistical Methods & Applications (2022)Cite this article

Abstract

Individual records referring to personal interviews conducted for a survey on income in Modena during 2012 and tax year 2011 were matched with the corresponding records in the Italian Ministry of Finance databases containing fiscal income data for tax year 2011. The analysis of the resulting data set suggested that the fiscal income data were generally more reliable than the surveyed income data. Moreover, the obtained data set enabled identification of the factors determining over- and under-reporting, as well as measurement errors, through a comparison of the surveyed income data with the fiscal income data, only for suitable categories of interviewees, that is, taxpayers who are forced to respect the tax laws (the public sector) and taxpayers who have many evasion options (the private sector). The percentage of under-reporters (67.3%) was higher than the percentage of over-reporters (32.7%). Level of income, age, and education were the main regressors affecting measurement errors and the behaviours of tax evaders. Tax evasion and the impacts of personal factors affecting evasion were evaluated using various approaches. The average tax evasion amounted to 26.0% of the fiscal income. About 10% of the sample was made up of possible total tax evaders.

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Acknowledgements

The authors are grateful to Giovanni Bigi, an officer of the Statistics Department of the Municipality of Modena, who contributed to building up the final data set using administrative records.

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Authors and Affiliations

  1. Department of Economics “Marco Biagi”, University of Modena and Reggio Emilia, Via Jacopo Berengario 51, 41121, Modena, MO, Italy

    Michele Lalla, Patrizio Frederic & Daniela Mantovani

  2. CAPP (Centre for the Analyses of Public Policies), Modena, Italy

    Michele Lalla & Daniela Mantovani

  3. RECent (Center for Economic Research), Modena, Italy

    Patrizio Frederic

Authors
  1. Michele Lalla
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  2. Patrizio Frederic
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  3. Daniela Mantovani
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Correspondence to Michele Lalla.

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Lalla, M., Frederic, P. & Mantovani, D. The inextricable association of measurement errors and tax evasion as examined through a microanalysis of survey data matched with fiscal data: a case study. Stat Methods Appl (2022). https://doi.org/10.1007/s10260-022-00633-6

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  • DOI: https://doi.org/10.1007/s10260-022-00633-6

Keywords

  • Fiscal income
  • Surveyed income
  • Response bias
  • Under-reporting
  • Over-reporting
  • Administrative data

JEL Classification

  • C46
  • D31
  • H26