The Optimal Deterrence of Tax Evasion: The Trade-off Between Information Reporting and Audits
Despite the widespread recognition of the effectiveness of information reporting to increase tax compliance, existing tax theory considers tax audits to be the only tool to prevent evasion. This paper extends tax theory by modeling information reporting as an additional enforcement instrument that allows a tax authority to acquire signals about taxpayers' income. The paper rigorously characterizes the optimal strategy to maximize tax revenue when enforcement resources are limited. It determines the optimal allocation of resources between audits and information reporting, which is governed by how effectively the signals facilitate audit targeting. The model demonstrates that the value of information reporting declines with audit coverage because of the corresponding decline in the value of audit targeting. The optimal level of information reporting is an inverse U-shaped function of the budget allocated to enforcement, while the optimal audit coverage always increases with the budget. This finding implies that at some point it may not be optimal to expand information reporting.
This policy note considers the impact of global digitalization of the economy on public tax administration based on the example of the Russian legal system from a comparative perspective. To understand the prospects of domestic taxation mechanisms, they are considered in comparison with similar mechanisms of other states and the legal regulation of foreign countries of Europe (European Union) and the United States while respecting the initiatives and solutions of international organizations (OECD, European Commission) in the context that is examined.
A macroeconomic assessment of the effectiveness of the use of digital tax administration is performed, and the stages of its institutional development are highlighted. Digital technologies ensure an increase in the collection of taxes and other obligatory payments, reduce labour costs for tax control, and decrease the administrative burden on businesses.
The main approaches to the digital transformation of the modern tax system are considered and new innovative developments and digital technologies in Russia are emphasized. It is noted that, currently, the Russian tax system in the context of the development of the digital economy is moving from an electronic to a ‘proactive state’.
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.