Effectivness of palestinian income tax rates in facing tax evasion
Effectivness of palestinian income tax rates in facing tax evasion
Date
2017-01-03
Authors
Rahhal, Akram
Journal Title
Journal ISSN
Volume Title
Publisher
Thomson Reuters
Abstract
The main challenge faced Palestinian Public Budget is the weaknesses of tax revenues in meeting the accelerating
of public expenditures. One of the main reasons of this weakness is the incompliance of taxpayers from their
duties toward their national government. Palestinian legislators tried to develop a new income tax system during
last 7 years to increase the income tax revenues. Unfortunately, the public budget still suffering from high deficit,
this case could be interpreted because of increasing the tax evasion- side effect of increasing tax rates-. This paper
is designed to explore whether the change in tax rates has raised the tax evasion or not. Therefore, this paper used
an indirect method to test the change in the percentage of tax evasion among last 5 years (the same periods of
issuing new income tax system). Our findings show that there is a positive relationship between changing income
tax rates and increasing the percentage of tax evasion in the last 5 years. The estimated tax evasion has been
increased by 22% from 2007 to 2015.
Description
Keywords
Income Tax Evasion, Income Tax Rates, Underground Economy, Tax Evasion Measurement