Wednesday, May 15, 2013

The tax payer as a tax enforcer

I am fine with paying my fair share of taxes as long as the others do, too. I do not like it when people hide their income and thus have me pay the taxes for them. The ones gaming the system are the rich (especially where filing taxes is very complex) and the independents, who can skimp on both income and sales tax. And this is why I always insist for a receipt or an otherwise documented transaction.

Marcelo Arbex and Enlinson Mattos consider my behavior like that of an auditor looking out for tax evasion. Except that I would need to be rewarded in some way for my requesting receipts, as I guess not everyone is a crusader like me. SO they come up with a system where I would be rebated part of the sales tax I just paid in return of me filing the receipts. The government then figures out how to best set the sales tax, the tax rebate and the audit expenses. It turns out that you can do without auditing because the tax rebates have a sufficient income effect. Interesting system. Let us call it value-added tax.

(I know, it is not a VAT, but the underlying mechanism is the same as in the VAT, which is not mentioned once in the paper. And still, both the VAT and the system described above require auditing as people could file fake receipts.)

1 comment:

Tom said...

Or you could be entered into a lottery with each sales tax receipt!