A. Zakrevskiy1, Vladislav Tokarev2
  • 1 MIPT, 1a-1, Kerch street, Moscow, 117303, Russia
  • 2 National Research University Higher School of Economics, 20 Myasnitskaya Str., Moscow, 101000, Russian Federation

Guaranteed and Probability-Based Approaches to Setting Rates for Taxes and fines

2004. Vol. 8. No. 3. P. 331–356 [issue contents]

This paper studies the problem of long-term influence of tax and fine rates changes as a government economy control means (policies). The distribution of tax authority resources between investigation and imposing of penalty provided by algorithms designed for dynamic model in previous paper [4] considered as operational policy. Since the reaction of taxpayers and tax authorities can’t be precisely predicted the probabilistic and guaranteeing approaches to planning are used. For both cases problems of long-term policy planning were brought to static deterministic task of minimizing which are different only by the way of critical distortion calculation. Analytical and numerical results were compared and their economical features were discussed.

Is proved that from tax authority standpoint the lowest possible tax rate is the most preferable. This conclusion is right under very general assumptions irrespective to the planning approach – guaranteed or probabilistic-guaranteed.

There is no well-defined answer for optimal fine rate. It can be equal to the top or bottom boundary of allowed set (rarely inside the set). The answer depends on intensity the rate of evasion diminishing and lowering efficiency of tax authority work if the tax rate is increasing.
Citation: Zakrevskiy A., Tokarev V. (2004) Garantiruyushchiy i veroyatnostnyy podkhody k vyboru stavok shtrafa i nalogooblozheniya [Guaranteed and Probability-Based Approaches to Setting Rates for Taxes and fines]. HSE Economic Journal , vol. 8, no 3, pp. 331-356 (in Russian)
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