The economic psychology of value added tax compliance

VAT is a tax on consumer expenditure, collected on business transactions and assessed on the value added to goods and services. It applies, with some exceptions (for example, to young children’s clothes and shoes in the UK), to all goods and services that are bought and sold. VAT is a general tax (as it applies, in principle, to all commercial activities) and a consumption tax (as it is paid ultimately by the final consumer). It is not actually a tax on business, though some business owners do see it that way. In fact, whilst VAT is paid to the tax authorities by the seller of the goods or services, the tax is paid by the buyer to the seller as part of the tax and so, in essence, businesses are acting as unpaid tax collectors. VAT was first introduced in France in 1954, and subsequently has been extended, through a series of directives, to cover the whole of the European Union (EU). The system in the EU is now reasonably standardized, although different rates of VAT apply in different EU member states. The minimum standard rate in the EU is 15 percent, though lower rates are applied to certain services. Some goods and services are exempt from VAT throughout the EU (e.g., postal services, insurance, betting). In addition to spreading throughout Europe (member states are required to introduce VAT, so the increase in membership of the EU has inevitably increased the number of countries that use this system), VAT has also been introduced in a large number of other countries, notably China (Yeh, 1997), and India (after many delays) in 2005, so that now over 130 countries world-wide operate VAT. In the Caribbean, for example, Belize, Dominica, Guyana, and Antigua have all introduced VAT in the past two years. Other countries have introduced taxes that are classified as value added taxes, such as Australia, which now operates a General Sales Tax (GST). The introduction of VAT has been the major tax reform around the world in the past 25 years, and VAT is now of global significance and impact (Ebrill et al., 2001)

Compliance externalities and the role model effect on law abidance : field and survey-experimental evidence

Recent theories of compliance predict that, apart from utilitarian considerations, individual decisions to respect or break the law account for virtuous motives and nonutilitarian willingness to promote the social good. We test whether empirical evidence supports these theories by collecting data on cyclists' decisions to ignore a red traffic light in a natural setting. We consider different situations where noncompliance is costly, but without risk, and where material deterrence incentives from legal sanctions remain constant. The only difference between the situations lies in who is observing the cyclists' decision at the traffic light at the intersection of a footpath with the cycle track. We find that about 68 percent of cyclists ignore the red traffic light when there is the opportunity to do so. This frequency does not change substantially when adult bystanders are observing at the pedestrian traffic light. Interestingly, the violation frequency drops to about 10 percent when children are present. Robustness checks rule out the alternative explanations that this change is driven by concerns for children's unpredictable actions, or by the simultaneous presence of other adult bystanders. In a vignette study, we additionally dissect the cyclists' motives for being compliant. Results suggest a “role‐model effect” on compliance. When asked, the majority of participants report that the willingness to educate and be a good example is the most important reason for their decision to abide by the law, hence supporting the empirical observation that promoting the social good can be an important nonutilitarian motive of compliance decisions

THE ROLE OF ALBANIAN FISCAL POLICIES TO THE IMPROVEMENT OF THE ECONOMY SITUATIONS

It’s clearly to say that, fiscal policies are one of the most keys in the hand of government that has many impacts in the growth of the country economy. Discussing about the tax evasion of the business and the informal economy like a product of it, I must say that is an current issue not only for my country, but also for all those countries in transition. All of us argue that in any country exists a business pressure to make fiscal evasion in order to achieve more their objective that is the maximization of profits. This seems to be aftermaths by many reasons especially by the economic environment of the country; meanwhile, by the other hand the government has another aim: how to get more and more revenues from taxation which is the main recourse of the financial budget. But , why are necessary the taxes? , Which are the criteria for tax design? Which is the relationship between policies and optimal taxation? How much is the growth of informal economy in Albania and which are the necessary strategies in order to reduce the tax evasion made by business? etc are some of the most important questions to made about the topics .Answering the questions, results an clearly picture about the economic environment of Albania and the things that must to do in order to resolve perhaps a bit the problem.Informal economy, tax evasion, tax design, fiscal policies

Risk-based audits in a behavioural model.

The tools of predictive analytics are widely used in the analysis of large data sets to predict future patterns in the system. In particular, predictive analytics is used to estimate risk of engaging in certain behavior. Risk-based audits are used by revenue services to target potentially noncompliant taxpayers, but the results of predictive analytics serve predominantly only as a guide rather than a rule. “Auditor judgment” retains an important role in selecting audit targets. This article assesses the effectiveness of using predictive analytics in a model of the compliance decision that incorporates several components from behavioral economics: subjective beliefs about audit probabilities, a social custom reward from honest tax payment, and a degree of risk aversion that increases with age. Simulation analysis shows that predictive analytics are successful in raising compliance and that the resulting pattern of audits is very close to being a cutoff rule

Exploring the dynamics of compliance with community penalties

In this paper, we examine how compliance with community penalties has been theorized hitherto and seek to develop a new dynamic model of compliance with community penalties. This new model is developed by exploring some of the interfaces between existing criminological and socio-legal work on compliance. The first part of the paper examines the possible definitions and dimensions of compliance with community supervision. Secondly, we examine existing work on explanations of compliance with community penalties, supplementing this by drawing on recent socio-legal scholarship on private individuals’ compliance with tax regimes. In the third part of the paper, we propose a dynamic model of compliance, based on the integration of these two related analyses. Finally, we consider some of the implications of our model for policy and practice concerning community penalties, suggesting the need to move beyond approaches which, we argue, suffer from compliance myopia; that is, a short-sighted and narrowly focused view of the issues

First Steps Towards an Ethics of Robots and Artificial Intelligence

This article offers an overview of the main first-order ethical questions raised by robots and Artificial Intelligence (RAIs) under five broad rubrics: functionality, inherent significance, rights and responsibilities, side-effects, and threats. The first letter of each rubric taken together conveniently generates the acronym FIRST. Special attention is given to the rubrics of functionality and inherent significance given the centrality of the former and the tendency to neglect the latter in virtue of its somewhat nebulous and contested character. In addition to exploring some illustrative issues arising under each rubric, the article also emphasizes a number of more general themes. These include: the multiplicity of interacting levels on which ethical questions about RAIs arise, the need to recognise that RAIs potentially implicate the full gamut of human values (rather than exclusively or primarily some readily identifiable sub-set of ethical or legal principles), and the need for practically salient ethical reflection on RAIs to be informed by a realistic appreciation of their existing and foreseeable capacities

Assuming Personal Responsibility for Improving the Environment: Moving Toward a New Environmental Norm

There is general agreement that we are nearing the end of achieving major gains in pollution abatement from traditional sources, that a significant portion of the remaining environmental problems facing this country is caused by individual behavior, and that efforts to control that behavior have either failed or not even been made. The phenomenon of individuals as irresponsible environmental actors seems counterintuitive when polls show that people consistently rate protecting the environment among their highest priorities, contribute to environmental causes, and are willing to pay more to protect environmental resources. This article is the author\u27s second effort at understanding why people who consider themselves to be “environmentalists” or support environmental causes behave in environmentally destructive ways, and what, if anything, can be done to change that behavior. The first article endorsed expansion of the abstract environmental protection norm to include individual environmental responsibility and concluded that doing this is the most promising approach to overcoming barriers to behavioral change. That article also identified environmental groups as the most effective “norm entrepreneurs” that can bring about widespread change in personal environmental conduct through carefully tailored information campaigns. This article expands on the earlier article’s discussion of the role norms play in influencing personal behavior and why changing them is a critical part of any campaign to make individuals more environmentally responsible. The best way to change norms is through education, as the first article acknowledged, but supplemental measures may be necessary. This article identifies what those additional measures might be and assesses their effectiveness. A third article will explore how republican theory supports the critical role that education performs in altering public behavior through changing norms. All three articles rest on the premise that the global climate change crisis has created circumstances in which norm change can take place, namely the occurrence of a second environmental republican moment, in which people are open to being educated about their civic responsibilities, including those pertaining to the environment. To develop these ideas, section II provides background information about individual contributions to environmental problems. Section III discusses various barriers to changing personal environmental behavior, such as the role federal laws play in perpetuating the myth that only industry is responsible for environmental harm. That section also explores certain cognitive heuristics that influence how people process information and personal barriers to changing behavior such as habits, inconvenience, cost, unavailability of alternatives, and self-interest. The role of norms in influencing behavior and how norms are formed and changed are examined in section IV. Next, section V investigates how a new norm of environmental responsibility might arise and displace competing norms. However, that section recognizes that the development of a new norm may not be an easy task because of some of the same barriers identified in section III. In section VI, acknowledging that neither norms nor the happenstance of an environmental republican moment will inexorably lead to changes in personal behavior, various norm and behavior-changing tools, such as public education, shaming and other sanctions, and market-based incentives are identified. Section VI examines the inherent strengths and weaknesses of these tools, as well as particular problems with their application to individual behavior. Section VII concludes that no single approach will work, but a combination of any or all of the above, depending on the source and nature of the problem, is called for. However, any combination of tools must include public education if a permanent new environmental norm is to emerge and change individual behavior in the long term

Professional and institutional morality:Building ethics programmes on the dual loyality of academic professionals

Most professionals have the arduous task of managing their own dual loyalty: in one contextual relationship, they are members of a profession while simultaneously they are employed as members of a locally established organisation. This sense of a dual loyalty has to be taken into account when professional bureaucracies develop ethics programmes. This article focuses on universities. Accounting for the dual loyalty of academic professionals, it is the objective of the study to contribute to the most appropriate ethics programmes in such an academic context. Based on a review of the literature, we identify which ethical issues commonly emerge in educational and research activities. Then we offer a conceptual analysis of the conditions required for each different strategy of ethics management. We argue that none of the four theoretically derived strategies is applicable solely on its own. For universities it is most promising to design ethics programmes based on the guiding values of the academic community, including integrity measures for universities and corrective measures for students. The argument developed in this article is assumed to be widely applicable in assessing the appropriateness of ethics management strategies in other professional settings. (Contains 1 figure and 3 tables.