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Formalisation Through Taxation

Paraguay’s Approach and Its Implications

  • Jonas Richter
Book

Table of contents

  1. Front Matter
    Pages i-xiii
  2. Jonas Richter
    Pages 1-7
  3. Jonas Richter
    Pages 9-30
  4. Jonas Richter
    Pages 31-43
  5. Jonas Richter
    Pages 45-62
  6. Jonas Richter
    Pages 63-89
  7. Jonas Richter
    Pages 91-103
  8. Jonas Richter
    Pages 105-114
  9. Back Matter
    Pages 115-117

About this book

Introduction

In developing countries, such as Paraguay, informality remains a prevalent and persistent issue. Many avoid formal registration with the authorities and evade tax payments. However, a growing academic literature argues for an interrelation between a broader tax base and a country’s economic and democratic development. A strand of this literature focuses on the means of taxing the informal sector and argues for positive revenue and growth effects. This Palgrave Pivot analyses Paraguay’s 2004 and 2012 tax reforms using both qualitative and quantitative data. It illustrates that the country’s personal income tax, as well as other alterations in the tax system, constitute an incentive and nudging mechanism that leads to a formalisation process of economic activity, and consequently to a broader tax base. Using interview and tax data, the book demonstrates how the reform initiates a rising demand of formalised purchases from both customers and businesses. It further suggests a potential way of how the taxpayers respond politically to the enhanced fiscal imperative.

Keywords

taxation informal economy tax system development economics Paraguay Paraguayan tax system formalizing economy direct tax bargaining inter-firm trade

Authors and affiliations

  • Jonas Richter
    • 1
  1. 1.The World BankHamburgGermany

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-030-29282-9
  • Copyright Information The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2019
  • Publisher Name Palgrave Pivot, Cham
  • eBook Packages Economics and Finance
  • Print ISBN 978-3-030-29281-2
  • Online ISBN 978-3-030-29282-9
  • Buy this book on publisher's site