Volume 20, Issue 14 (2012)
J Tax Res 2012, 20(14): 205-228 |
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Nassiriaghdam A, Nouri M, Kakavandi M. The determinants of the Informal Economy: Tax Burden versus the Regulatory Environment. J Tax Res 2012; 20 (14) :205-228
URL: http://taxjournal.ir/article-1-61-en.html
URL: http://taxjournal.ir/article-1-61-en.html
1- Faculty Member of Jahad-e-Daneshgahi , alinasiri110@gmail.com
2- PhD student of Economics, University of
3- MA Student of Economics; University Of Tehran
2- PhD student of Economics, University of
3- MA Student of Economics; University Of Tehran
Abstract: (12169 Views)
As the size of the informal economy increases, the growth opportunities of the firms reduce, and the government tax revenue decreases. Therefore, increasing the formal business activities is a fundamental priority of policy-makers. This paper hypothesized that by both decreasing tax rates and regulatory burden, agents move into formal economy. Empirical results indicate that (1) reducing tax rate decreases the size of the informal sector, both in high income, and in middle and low income countries (2) Tariff rate has a significant effect on underground economy only in high income countries (3) Reducing the costs of starting a business affects informal activities regardless of the income level of the countries (4) The costs of property registration has a significant effect only on middle and low income countries and (5) Efficiency of legal system explains the size of the informal sector in high income countries.
Keywords: Tax Rate, Regulatory Burden, Tariff Rate, Legal System, Informal Economy, Business Environment
Type of Study: Research |
Received: 2012/07/29 | Accepted: 2012/09/19 | Published: 2014/03/7
Received: 2012/07/29 | Accepted: 2012/09/19 | Published: 2014/03/7
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