Informal Taxation

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Informal Taxation

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Title: Informal Taxation
Author: Singhal, Monica; Olken, Benjamin A.

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Citation: Olken, Benjamin A., and Monica Singhal. 2009. Informal Taxation. HKS Faculty Research Working Paper Series RWP09-033, John F. Kennedy School of Government, Harvard University.
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Abstract: Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional implications of this "informal taxation." Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more regressive than formal taxes. Failing to include informal taxation underestimates household tax burdens and revenue decentralization in developing countries. We propose a simple model of information and enforcement constraints that parsimoniously explains the patterns in the data.
Published Version: http://web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=6852
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:4449108
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