Tax Enforcement Using a Hybrid between Self- and Third-Party Reporting

Clifford, Sarah and Mavrokonstantis, Panos (2019) Tax Enforcement Using a Hybrid between Self- and Third-Party Reporting. Oxford University Centre for Business Taxation, Oxford.

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Abstract

We study behavioural responses to a widely-used tax enforcement policy that combines elements of self- and third-party reporting. Taxpayers self-report to the tax authority but must file
documentation issued by a third-party to corroborate their claims. Exploiting salary-dependent cutoffs governing documentation requirements when claiming deductions for charitable contributions in Cyprus, we estimate that deductions increase by £0.7 when taxpayers can claim £1 more without documentation. Second, using a reform that retroactively shifted a threshold activating
documentation requirements, we estimate that at least 64% of the response is purely a reporting adjustment. Finally, reporting thresholds affect the responsiveness to tax subsidies.

Item Type: Other Working Paper
Keywords: Oxford University Centre for Business Taxation; Tax enforcement; Tax compliance; Charitable giving; Tax design
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 09 Sep 2019 08:23
Last Modified: 09 Sep 2019 08:23
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/7432

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