Tax Screening, Tax Frictions, and Tax Ordeals as Mechanisms for Prevention of Information Asymmetry in the Tax System
DOI:
https://doi.org/10.33119/ASCASP.2022.2.1Keywords:
tax system, tax evasion, tax avoidance, information asymmetry, tax frictions, tax screeningAbstract
The article presents the tax system as an issue in the context of information asymmetry. It also discusses three mechanisms to reduce the negative impact of this asymmetry on the formation of the tax system and the level of tax compliance in the economy. Tax screening is a set of solutions allowing for the determination of the characteristics of groups of taxpayers based on their tax choices. This enhances evidence-based decisionmaking capabilities of tax authorities and regulators regarding taxpayer behaviour and allows for effective tax system decisions in general and more control activities in particular. Tax frictions automatically discourage taxpayers from making certain tax choices that are inconsistent with the intention of the legislator, reducing the intensity and cost of corrective actions. Tax ordeals impose additional costs on some procedures related to tax benefits, increasing the likelihood that only authorised entities benefit from them. The article analyses the above-mentioned mechanisms of eliminating information asymmetry in the tax system in the theoretical and practical context and presents recommendations for their effective implementation.
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