Abstract: Economic growth and social evolution are connected to trust relationships in a society. The quality of the accounting information, the tax information system and the tax audit mechanism evolve multiple benefits in an economy. Tax evasion, the illegal practice where people and companies do not pay taxes, is a crime because of the negative effect in economy and society. In this paper, we describe a theoretical framework on the characteristics of a fair and efficient tax auditing information system which could be a tool against tax evasion, a tool for an economy to grow, especially in countries that face fluctuations in economic activity. We conclude that a fair and efficient tax auditing information system increases the reliability of tax administration, improves taxpayers’ tax compliance and causes a developmental trajectory for the economy.
Abstract: A tax authority wants to take actions it knows will foster
the greatest degree of voluntary taxpayer compliance to reduce the
“tax gap.” This paper suggests that even if a tax authority could attain
a state of complete knowledge, there are constraints on whether and
to what extent such actions would result in reducing the macro-level
tax gap. These limits are not merely a consequence of finite agency
resources. They are inherent in the system itself. To show that this is
one possible interpretation of the tax gap data, the paper formulates
known results in a different way by analyzing tax compliance as a
population with a single covariate. This leads to a standard use of the
logistic map to analyze the dynamics of non-compliance growth or
decay over a sequence of periods. This formulation gives the same
results as the tax gap studies performed over the past fifty years
in the U.S. given the published margins of error. Limitations and
recommendations for future work are discussed, along with some
implications for tax policy.