attitude behavior consistency in tax compliance a cross national comparison abstract are individuals attitudes about paying taxes consistent with their behavior a direct link between attitudes tax morale and behavior tax compliance has long been assumed despite an extensive social scientific literature attesting to the generally weak congruence between the two this study builds on an emerging body of work questioning the link between tax morale and compliance it innovates with a cross national experimental research design whose results indicate that populations with high levels of tax morale exhibit higher evasion rates than those with low levels of tax morale thus the study finds that individual self reported tax morale cannot predict actual evasion choices methodologically the paper contributes the first results of a laboratory experiment on taxation in denmark comparing them to laboratory findings from italy while previous research indicates that these two countries lie at opposite extremes in tax compliance and morale our findings run contrary to culturalist explanations our results show that danes are more likely to evade tax than italians and that individuals attitudes toward tax do not significantly predict their actual evasion choices finally we show that discrepancies in tax behavior between italian and danish subjects are affected by gender and risk aversion

environmental policy intra industry trade and transfrontier pollution the paper discusses effects of domestic environmental policy on foreignemissions and on transboundary pollution we use a dixit stiglitz typemodel of monopolistic competition with an endogenous number of firms production generates environmental externalities which spill over to theother country it is shown that environmental policy has an impact onmarket structure at home and abroad these market structure effectsinduce changes in emissions abroad in contrast to what has been derivedin earlier contributions it turns out to be possible that tighterenvironmental standards at home lead to less emissions abroad the paperderives these results and provides the economic intuition behind them finally conditions for optimal environmental policies are derived

applications of behavioural economics to tax evasion the paper reviews recent models that have applied the techniques of behavioural economics to the analysis of the tax compliance choice of an individual taxpayer the construction of these models is motivated by the failure of the yitzhaki version of the allingham sandmo model to predict correctly the proportion of taxpayers who will evade and the effect of an increase in the tax rate upon the chosen level of evasion recent approaches have applied non expected utility theory to the compliance decision and have addressed social interaction the models we describe are able to match the observed extent of evasion and correctly predict the tax effect but do not have the parsimony or precision of the yitzhaki model

corruption a review as is increasingly recognised in academic literature and by international organisations corruption acts as a major deterrent to growth and development the aim of this survey is to organise and summarise existing theoretical and empirical work on corruption with a view to identifying opportunities for further research the paper begins with a brief overview of key definitions of corruption and then turns to a review of the factors that favour or deter the growth of corruption together with a brief look at related models this is followed by an examination of the consequences of corruption for society and the consideration of measures that might help to reduce corruption the paper ends with suggestions for future research and includes summaries of data sources and key variables for use in this research

impacts of eu carbon emission trade directive on energy intensive industries indicative micro economic analyses the cost impacts from the european emission trading system ets on energy intensive manufacturing industries have been investigated the effects consist of direct costs associated to the co2 reduction requirements stated in the eu directive and of indirect costs of comparable magnitude that originate from a higher electricity price triggered by the ets in the power sector the total cost impacts remain below 2 of the production value for most industries within the ets in the kyoto period in the post kyoto phase assuming a 30 co2 reduction the total cost impact may raise up to 8 of production value in the heaviest industry sectors in steel and cement industries the cost impacts are 3 4 fold compared to the least affected pulp and paper and oil refining electricity intensive industries outside the ets will also be affected for example in aluminum and chlorine production the indirect cost impacts from ets could come up to 10 of production value already in the kyoto period as industry sectors are affected differently by the ets some correcting mechanisms may be worthwhile to consider in securing the operation of the most electricity intensive sectors e g balancing taxation schemes that may include as income source a levy on the wind fall profits of the power sector due to ets a future improvement in ets for industries within the scheme could be scaling of the emission reduction requirement so that the relative total emission reduction costs are at about the same level

regulation factor rewards and international trade this paper develops an approach for incorporating regulation into the theory of production distribution and trade using environmental regulation as an example four major conclusions emerge in the course of the analysis 1 production process regulation is equivalent in its effect on other cooperating factors to neutral technical regress i e negative progress 2 specific unambiguous income redistribution consequences follow from such regulation if commodity prices are held constant the factor used relatively intensively in the non regulated industry will gain absolutely in terms of both goods 3 unilateral or uncoordinated regulation destroys the link between uniform world commod ity prices and identical factor proportions factors prices across trading countries or regions 4 if any factor of production is freely mobile across frontiers the least differential regulation as between countries will entirely drive out the regulated industry from the more to the less regulated economy

tax morale and prosocial behaviour evidence from a palestinian survey the first empirical investigation is conducted into the relationship between prosocial behaviour and tax morale in the context of state capacity building as in the palestinian territories we consider public spirit a positive attitude adopted by citizens for the benefit of the community and associational activity individuals engagement in voluntary activities two major expressions of prosocial behaviour and estimate their impact on palestinians tax morale intrinsic motivation to pay taxes the empirical analysis employs a unique palestinian public opinion survey conducted in 2007 in the west bank and the gaza strip by using a bivariate probit model we find that tax morale increases with public spirit but it is lower among palestinians involved in associational activities predicted conditional probabilities indicate that public spirit has more impact when the respondent has low confidence in the institutions and in the rule of law finally more public spirit is required for a self employed person in order to deal with tax compliance than for a worker in the public sector unless the worker in the public sector has lower confidence in the institutions and in the rule of law than the self employed person

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

the enlargement of the european union effects on trade and emissions of greenhouse gases abstract with the gradual accession of various central and eastern european countries ceecs to the european union eu international trade between the eu and the ceecs will change as a result of trade liberalisation and the mobility of production factors within the eu the eu and most of the ceecs have already committed themselves to reduce by 2008 2012 their emissions of greenhouse gases ghgs by 8 compared to the 1990 level this paper reports on an investigation of the potential consequences of the enlargement of the eu and of the emission reduction target set by the kyoto protocol on the sectoral production patterns and international trade a comparative static general equilibrium model was developed to examine the impacts under different scenarios for illustrative purposes two regions the eu and the ceecs and three categories of goods and services agricultural goods industrial goods and services were included the model was calibrated by the 1998 data the model was subsequently applied to study the effects of free trade the mobility of factors and the environmental constraints on production and international trade in light of the enlargement of the eu we show that in this specific context free trade is beneficial to economic welfare and does not necessarily increase emissions of greenhouse gases the mobility of factors also increases economic welfare but in the case of fixed production technology it may harm the environment through more emissions of ghgs

paying tax is part of life social norms and social influence in tax communications abstract a number of studies on taxpayer interaction from large scale surveys to field experiments reveal that people s tax compliance attitudes and behavior change after they discuss tax with other taxpayers however we know very little about the content of these communications and the processes by which they produce changes in tax compliance to address this knowledge gap we employed an in depth analysis of naturally occurring online discussions about income tax among software developers using a discourse analytic framework we report an empirical analysis of 120 online interactions between taxpayers providing a categorization of these interactions interactions ranged from asking for information about tax regulations and receiving such information to a variety of interactions aimed at persuading defiant individuals to comply with tax laws these persuasion techniques varied from stating the benefits of compliance to threats of severe economic and reputational consequences overall this study is the first in depth empirical investigation of social influence processes in taxpayer communication we discuss how the results inform research into social norms and tax compliance tax communication in social networks and persuasive messaging in tax compliance campaigns

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

interest rate restrictions and deposit opportunities for small savers in developing countries an analytical view this article argues that by forcing financial intermediaries fi to substitute implicit interest for monetary interest payments deposit rate ceilings may increase the cost of savings mobilisation especially from non wealthy households this mechanism may partially explain the lack of small savers deposit opportunities in developing countries a simple model is used to elucidate this mechanism as well as the effects of financial technology intensity of competition and external funding on an fi s savings mobilisation operations

economic and environmental implications of turkish accession to the european union a cge analysis abstract the purpose of this paper is to analyze the economic and environmental implications of turkey s possible accession to the european union eu the paper focuses on the impacts of three main components of turkey s possible eu membership i the free movement of labor between the eu and turkey ii the free movement of capital and iii the burden sharing of turkey in terms of the eu s environmental objectives in the horizon of 2020 that is the reduction of carbon emissions among these a particular focus is placed on the influence of the co 2 emission reduction targets in both regions and their consequences on the carbon price in 2020 we estimate the resource allocation effects of eu climate change policies on both regions by taking into account the likely labor movement from turkey to the eu and capital movement in the reverse direction the results show that different emission targets for the two regions bring about a change in comparative advantages and thus a change in interregional competitiveness

putting up or shutting up on the individual level relationship between taxpaying and political interest in a developmental context abstracthistorical research mainly focused on early modern europe has suggested a positive link between taxation and democracy this study approaches the connection in a present day developmental context by looking at differences between taxpayers and non taxpaying citizens in terms of political interest a precondition for accountability demands using survey data from sub saharan africa a multilevel analysis shows that taxpaying increases political interest the causal direction of this finding is confirmed through an instrumental variable analysis the results support the existence of the mechanisms underlying the theory of taxation working as a generator of political engagement and democracy

how family ties affect trust tax morale and underground economy abstract this paper reports empirical evidence supporting the hypothesis that family ties should be considered among the main determinants of tax morale underground economy and trust in societies where the power of the family is very high the quality of public institutions tends to be low this connection shapes the behavior of taxpayers and tends to increase the underground economy the econometric analysis is based on linear panel data models and a new original dataset that puts together data on personal values social capital and tax morale in combination with an index of the shadow economy the final results show that in countries where family ties are stronger the level of trust and tax morale is lower while underground economy is higher

the impact of selected abatement strategies on transnational pollution the terms of trade and factor rewards a general equilibrium approach abstract widespread publicity of international conflict over transfrontier pollutants such as acid deposition and the november 1986 chemical spill in the rhine river has increased the public s awareness of the need to devise abatement strategies appropriate for transnational pollution this article develops a general equilibrium approach for analyzing the economic impacts of selected abatement strategies the model includes internationally mobile goods capital and pollution flows and flexible output and factor prices the general equilibrium approach provides policymakers with important information which is usually not revealed by a partial equilibrium approach that is demonstrated by applying the model to the north american acid deposition issue

federalism and the shadow economy this paper analyzes the relationships between federalism and the shadow economy the theoretical analysis leads to the conclusion that the shadow economy is smaller in federal countries than in unitary states the mobility of individuals among competing jurisdictions leads policy makers to adopt policies that are more efficient in terms of taxation and public good provision this increases the return for activities in the formal sector relative to those in the informal one thus reducing activity in the shadow economy a cross sectional empirical analysis of a sample of 73 countries confirms this theoretical prediction

trade and the environment from a southern perspective the relationship between free trade and the environment is one of the main issues of contention between environmental and ecological economics environmental economics assumes a positive relationship between free trade economic growth and environmental policies environmental externalities may cause important damage however trade is not to be blamed for this instead the fault lies with policy inadequacies at the national level on the other hand some ecological economists criticise the assumptions of environmental economics especially the immobility of production factors and the positive correlation between income and environmental quality they plead for measures to prevent deterioration of northern environmental standards in a race to the bottom due to ecological dumping from the south in this paper we argue that neither environmental economics nor northern ecological economics take into account the structural conditions determining the international trade system based on some new empirical evidence on material flows we stress the notion of environmental cost shifting if physical and political ecology perspectives are adopted a southern approach to the trade and environment issue may arise 2001 elsevier science b v all rights reserved

tax progressivity income distribution and tax non compliance this article examines the determinants of tax non compliance when we recognise the existence of an imperfectly competitive tax advice industry supplying schemes which help taxpayers reduce their tax liability we apply a traditional industrial organisation framework to model the behaviour of this industry this tells us that an important factor determining the equilibrium price and hence the level of noncompliance is the convexity of the demand schedule we show that in this context this convexity is affected by the distribution of pre tax income the progressivity of the tax schedule and the way in which monitoring and penalties vary with income it is shown that lower pre tax income inequality as well as a less progressive tax code may cause more tax minimisation activities therefore the frequently advocated policy of reducing the highest tax rate may fail as a policy directed at improving tax discipline one way of offsetting the possible harm to tax compliance from a less progressive tax could be an adjustment of the penalty and monitoring functions

the effect of environmental taxes on the volume of international trade abstract this paper is a response to ropke s 1994 question whether environmental taxes increase or decrease the volume of international trade using a three country heckscher ohlin samuelson model it is shown that the effect can be in either direction in the absence of pollution haven and three country effects that reverse natural comparative advantage environmental taxes decrease increase the volume of trade between any two countries when the tax is larger in the country that exports imports the pollutive good the environmental tax can also generate strong trade effects between two of the countries changing production costs and thereby reversing the expected tax effect on a third country the effects on trade are likely to be smaller when comparable pollution damage is global rather than local

opting out of the social contract tax morale and evasion we examine the individual level determinants of tax morale in low capacity states specifically latin american countries where the social contract is often perceived as fractured we argue that in

precautionary and speculative aspects of the behaviour of banks in the united kingdom under competition and credit control 1972 1980 when deciding upon the balance of its portfolio an economic agent must take into account many different types of risk the most obvious are those about future asset prices and transaction flows which respectively lend the problem its speculative and precautionary aspects this paper develops a model of uk bank behaviour under the competition and credit control ccc conventions which allows for both types of risk and yet is sufficiently tractable to be fitted empirically following previous uk studies we suppose that banks are risk averse maximising expected utility over a discrete decision period and assume that the distribution of asset returns is independent of that of cash and reserve losses in addition we assume that if the precautionary balances chosen by the bank initially are insufficient to cope with outflows of funds during the decision period without infringing the ccc conventions then the bank will face transactions or penalty costs this assumption distinguishes our model from those used in previous uk studies and gives it its precautionary aspects the basic model is set out in section i of the paper it is noted that reserve assets cash and short term money market items have similar speculative risk characteristics so that the banks problem can be separated into precautionary and speculative sub problems the first involving holdings of cash and reserve assets the second involving the remaining portfolio items the resulting relationships are discussed in section ii these may be estimated using simultaneous non linear equation methods the results are discussed in section iii

building support for taxation in developing countries experimental evidence from mexico abstract drawing on insights from the literature on institutional design how rules shape behavior to achieve desired outcomes this article examines how certain design features of taxes such as allowing for civil society oversight earmark mechanisms that direct tax revenue for a specific purpose and sunset provisions that make the duration of taxes finite affect political support for tax reforms it also evaluates how three important aspects of the fiscal exchange trust in government perceptions of the public good and level of income shape the effect of these design features based on an original survey experiment focusing on the provision of public safety in mexico i find that these design features increase political support for taxation especially among those with low trust in government and low income these findings have important implications not just for mexico but also a number of other countries across latin america that have both low levels of extraction and increased public spending imperatives

estimating border tax evasion in mozambique abstract the relationship between border tax rates and evasion is examined for mozambique using the methodology developed by fisman and wei 2004 we find that high tax rates are associated with high levels of under reporting of import values and that tax rates have a strong and positive effect on tax evasion results also strongly confirm the presence of fraudulent classification of merchandise into lower taxed product categories finally analysis of the revenue implications of lower trade taxes finds that the revenue curve is quite flat but remains upward sloping with respect to the tax rate when only evasion is considered

the impact of corruption on firm tax compliance in transition economies whom do you trust tax compliance is an important issue for gov ernments and the public alike to meet public needs and fund public mandates firms around the world are expected to comply with tax laws factors that are related to orga nizational firm tax compliance have not been sufficiently examined in the literature owing to the increasing global influence of transition economies factors associated with firm tax compliance in transition economies are particu larly of interest based on a sample of over 5 000 firms from 22 former soviet bloc transition economies we find that higher levels of corruption and higher levels of par ticularized trust reliance on friends and family are asso ciated with lower levels of tax compliance interestingly we also find that the negative relationship between cor ruption and tax compliance is weakened in situations of higher generalized trust trust in strangers overall our study s results suggest that institutional factors play an important role and are related to firm tax compliance behavior in transition economies

government accountability and fiscal discipline a panel analysis using swiss data government accountability through electoral engagement involvement and participation in the political debate can affect government performance using data for the full sample of swiss cantons over the 1981 2001 period this paper provides empirical evidence that government accountability is crucial for fiscal discipline specifically in cantons with high levels of government accountability the level of indebtedness is significantly lower indicating that accountability supports fiscal discipline to obtain a useful approximation for government accountability between citizens and their representatives we use information from direct voter participation in political decisions initiatives and public referenda in swiss state cantonal governments electoral support of government proposals reveals an important aspect of accountability in a real world setting

the simple economics of bank regulation this paper discusses the effects of central bank regulation of the banking system carried out to control the level of bank lending prudential regulation designed to reduce the frequency of bank failure a problem in the economics of uncertainty and information is not considered the main point of this paper is that bank regulation in so far as it is effective and goes beyond the general effects of government intervention in credit markets can be seen as a tax on transactions intermediated through banks the variations in the incidence and beneficiaries of the tax provide a convenient framework for the different regulatory schemes the paper focuses on the effect of regulation on an individual bank the theory presented here is an elementary comparative static one based on the equality of marginal cost and marginal revenue it does not consider the more complicated issues of dynamic control however it is unlikely that any policy that has unsatisfactory comparative static properties will be successful the main ideas of this approach are due to tobin 1963 and johnson 1967 197 1 they have been further developed in work by spencer and mowl 1978 and artis and miller 1978 however the application of the analysis to the effects of different types of regulation is i believe new a general equilibrium model in the same spirit as the partial equilibrium model used here is given by fama 1980 the following section presents a simple model of the banking system section ii discusses the effect of government intervention and regulation and section iii looks at the way in which government regulation induces disintermediation section iv applies the previous results to consider various actual or proposed schemes in practice the final section draws conclusions

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

international trade and environmental regulation time series evidence and cross section test this paper examines empiricallywhether more stringent domestic environmental policiesreduce the international competitiveness ofenvironmentally sensitive goods esgs our timeseries evidence indicates that there are no systematicchanges in trade patterns of esgs in the last threedecades despite the introduction of more stringentenvironmental regulations in most of the developedcountries in the 1970s and 1980s this observedphenomenon is then subjected to a multi countryeconometric test using an extended gravity equationframework the test suggests that overall morestringent environmental regulations do not reducetotal exports exports of esgs and exports ofnon resource based esgs neither was there anyevidence to support the hypothesis that new tradebarriers emerge to offset the effects of morestringent environmental regulations

trade spatial separation and the environment we develop a simple two sector dynamic model to show how pollution can provide a motive for trade by spatially separating incompatible industries we assume that the production of smokestack manufactures generates pollution which lowers the prod uctivity of an environmentally sensitive sector farming two identical unregulated countries will gain from trade if the share of world income spent on smokestack goods is high in contrast when the share of world income spent on the dirty good is low trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of smokestack goods 1999 elsevier science b v all rights reserved

corporate bank borrowing in the uk 1965 1981 the instability of demand for money equations in both the united states and the united kingdom in the 1970s has reinforced the view that money holdings may usefully be viewed as buffer stocks and that observed movements in broad monetary aggregates may reflect supply side shocks predominantly caused by changes in bank lending to the private sector judd and scadding 1981 goodhart 1982 laidler 1983 this paper presents some new econometric results for uk bank lending to industrial and commercial companies iccs the results are consistent with the view that the quantity of bank borrowing is largely demand determined and as such they provide additional support for the view of a credit driven money stock coghlan 1981 moore 1979 1983 the demand for bank credit by iccs appears highly interest inelastic at least within the single equation framework of this paper finally the policy implications of the study suggest that contrary to some previous work during the period considered 1965 to mid 1981 the bank of england was largely unsuccessful in its attempts to control bank lending by discriminatory regulation gowland 1978 artis and lewis 1981

corruption extortion and evasion corruption evasion and the abuse of power and the possibility thereof are pervasive features of economic activity a prominent instance is tax collection this paper examines the implications of corruptibility and the potential abuse of authority for the effects and optimal design of potentially non linear tax collection schemes amongst the findings are that the distributional effects of evasion and corruption are unambiguously regressive under the kinds of schemes usual in practice and collecting progressive taxes without inducing evasion or corruption may require that inspectors be paid commission on high income reports but not on low with the cost of this potentially creating what seems to be a previously unnoticed trade off between equity and efficiency

the economics of taxpayer compliance there is now a great deal of evidence suggesting that tax evasion is fairly widespread throughout european and north american economies estimates of the so called black economy indicate that perhaps 10 per cent of economic activity in these countries has been driven underground in the attempt to evade payment of tax for a detailed survey see pyle 1989 chs 2 4

reconciling the conflict between the pollution haven hypothesis and an emerging trajectory of international technology transfer abstract many developing countries have relied on technology transfer through foreign direct investment fdi from developed countries as a primary means of technology acquisition however recent increased global eco consciousness and linking of trade and investment with environmental issues has the potential of disrupting these investment flows this paper investigates the validity of the pollution haven hypothesis which claims that an open market regime will encourage the flow of generally low technology polluting industries to developing countries from a neo technology trade perspective in the process an emerging trajectory of international technology transfer favoring high technology industries is established this paper concludes that positive measures enhancing fdi is not only crucial for technology upgrading but at the same time brings about enhanced environmental welfare through transfer of eco friendly products and production processes

tax morale in latin america in the tax compliance literature there is a lack of empirical evidence on the degree of tax morale in developing countries as a novelty this paper focuses thus on latin america analysing tax morale as a dependent variable and searching for factors that systematically affect tax morale working with the two data sets latinobarometro and world values survey our findings indicate that there is a significant correlation between tax morale and the size of shadow economy furthermore people who said they knew have heard about practised tax avoidance have a significantly lower tax morale than others looking at individuals perception of reasons for tax evasion we found that the tax burden lacking honesty and corruption are seen as the main factors we observed a significantly lower tax morale in south america mexico than in the central american caribbean area furthermore trust in the president and the officials the belief that other individuals obey the law and a pro democratic attitude have a significant positive effect on tax morale

the not so dark side of trust does trust increase the size of the shadow economy this paper reports a negative relationship between the size of the shadow economy and generalized trust in a sample of countries both developed and developing that relationship is robust to controlling for a large set of economic policy and institutional variables to changing the estimate of the shadow economy and the estimation period and to controlling for endogeneity it is independent from trust in institutions and from income inequality and is mainly present in the sample of developing countries those findings suggest that the tax compliance effect of trust dominates its role as a substitute for the formal legal system

tax morale and tax evasion reports the study proposes a new measure of tax morale for italy based on voluntary tax evasion reports using this measure i detected a positive relationship between tax morale and social capital political participation and immigration but a negative relationship between tax morale and the dissatisfaction with public services and unemployment

taxing the informal economy the current state of knowledge and agendas for future research abstractthis paper reviews the literature on taxation of the informal economy taking stock of key debates and drawing attention to recent innovations conventionally the debate on whether to tax has frequently focused on the limited revenue potential high cost of collection and potentially adverse impact on small firms recent arguments have increasingly emphasised the more indirect benefits of informal taxation in relation to economic growth broader tax compliance and governance more research is needed we argue into the relevant costs and benefits for all including quasi voluntary compliance political and administrative incentives for reform and citizen state bargaining over taxation