Abstract
We investigate whether more resources should be devoted to a Thai tax enforcement program which is aimed at bringing small businesses into the tax system. We show that the appropriate criteria for determining whether more resources should be devoted to tax enforcement is whether the Atkinson–Stern condition for the optimal provision of a publicly-provided good is satisfied, or equivalently, whether the marginal cost of finds obtained through additional tax enforcement, SMCFp, is less than the marginal cost of funds obtained through raising tax rates, SMCFt. In our base case scenario, the SMCFp is 11.60 which exceeds our estimate of the SMCFt for an across-the-board increase in income tax rates on wage earners. The use of pro-poor distributional weights makes expanding the survey less attractive if the alternative way of obtaining additional tax revenue is an across-the-board income tax rate increase, while aversion to tax evasion makes it more attractive.
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Poapongsakorn, N., Charnvitayapong, K., Laovakul, D. et al. A Cost-Benefit Analysis of the Thailand Taxpayer Survey. International Tax and Public Finance 7, 63–82 (2000). https://doi.org/10.1023/A:1008706113216
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DOI: https://doi.org/10.1023/A:1008706113216