In this chapter, the research team presents a comprehensive account of theories on income tax evasion and its effect on the economy.
Taxation policy and practice” by Dora Hancock, defined “Tax as a compulsory levy, imposed by government, on income, expenditure or capital assets, for which the tax payer receives nothing in return”
Organization of Economic Co-operation and Development (OECD) on a debate concluded that the term tax could be “confined to compulsory unrequited payment to government”. From the above definition, one can draw the following conclusion or implications:
Tax is an imposition
It is a compulsory levy
Tax is a no quid pro qua payment to the tax payer
It involves capital or funds outlay
Taxation is a compulsory levy and an imposition by the government or the authority that be. Hence the team has no other choice than to state that “tax is a payment forced down the throat of the tax payer by the powers that be. The conclusion drawn from this exposition is that, taxes have been and still continue to be a vexatious issue because one can cite several instances of peoples’ resentment to taxes.
Taxes are considered a problem by everyone. Not surprisingly, taxation problems date back to earliest recorded history.
During the various reins of the Egyptians pharaohs tax collectors were known as ‘scribes’. During a period the scribes imposed a tax on cooking oil. To insure that citizens were not avoiding the cooking oil tax scribes would audit households to insure that appropriate amounts of cooking oil were consumed and that citizens were not using leavings generated by other cooking processes as a substitute for the tax oil.
In times of war the Athenians imposed a tax referred to as ‘eisphora’. No one was exempt from the tax which was used to pay for general wartime expenditures. The Greeks are one of the few societies that were able to rescind the tax once the emergency was over. Athenians also imposed a monthly poll tax on foreigners, people who did not have both Athenian mother and father.
The earliest taxes in Rome were customs duties on imports and exports called ‘portoria’. Caesar Augustus was considered by many to be the most brilliant tax strategist of the Roman Empire. During his reign cities were given the responsibility for collecting taxes instead of the publican and also instituted an inheritance tax to provide retirement funds for the military. Saint Matthew was a tax collector from Capernaum during Caesar Augustus reign. Income tax was announced in Britain by William Pitt who is often referred to as the father of income tax in his budget of December 1798 and introduced in 1799, to pay for weapons and equipment in preparation for the Napoleonic wars. The tax was repealed in 1816 and opponents of the tax who thought it should only be used to finance wars wanted all records of the destroyed along with its repeal.
Taxation can be explained from the administrative perspective. It is easier to tax import goods than domestic output. Import duties were among the earliest taxes. Similarly, the simple turnover tax (levied on gross sales) long held precedence over the conceptually preferable value added tax.
Taxes played relatively minor role in the ancient world and taxes on consumption were levied in Greece and Rome. Tariffs on imported goods were often of more considerable importance than internal excise duty so far as the production of revenue went. Later taxes on property were imposed temporarily and were confined to real property and later extended to cover other assets.
During the latter parts of the middle ages, some German and Italian cities introduced several direct taxes such as head taxes for the poor. Indeed, taxes have been a major subject of political controversy throughout history, even before they formed a sizeable part of the national income. A notable instance is the rebellion of the American colonies against Great Britain when the colonies refused to pay taxes imposed by parliament in which they have no voice, hence the slogan “No taxation no representation” raised by James Otis in 1764 according to Stanley L.Klos book (Economic Home Run, 1999). Payment of tax especially income tax is not a pleasant exercise to the taxpayer.
The prevalent idea during the nineteenth century (C19th) was that, taxes should mainly serve to finance the government expenditure. Governments since time immemorial have utilized taxation for other than merely fiscal purposes. One useful way to view the purpose of taxation is to look at taxation from the perspectives of American Economic Stability. The stabilization objectives which tax policy share with government expenditure policy (under the rubric of fiscal policy) and monetary policies is the maintenance of high employment and price stability.
The rationales for imposing taxes in a market economy such as the stems for the government responsibility are listed below;
2.2.1    Redistribution of income and wealth
Through the institution of a progressive system, the rich are made to contribute more to the “taxation” fund than the poor. The mechanism for the distribution of wealth by the use to transfer payments and benefits are helpful to those members of society who are employed.
2.2.2    Promotion of social and economic welfare
Government often takes on paternalistic role by providing ‘MERIT’ goods e.g. health and education. Merit goods, unlike public goods can be provided privately, but if left completely to market forces, merit goods and services would be under consumed. So are some merits goods and services that should be provided by the state alone to encourage patronage. These merits goods and include, health equipment, school gadgets, roads and markets, so that people can benefit and also to ensure a healthy and educated society i.e. there are external
benefits in provision of merit goods. All these goods and services are provided through the help of taxation. Taxation is the sources of all development projects in a country.
2.2.3    Economic stability
Taxation can be used as a tool to control the level of inflation or deflation. A spiral inflationary situation may be curbed by increasing the incidence of taxation and by decreasing the volume of money in circulation.
Government uses taxation as a monetary tool to control inflation and ensure economic stability. When inflation is high the government increases the level of taxation and vice versa. These measures are as a result of taxation in order to avoid high level of inflation and unemployment in the economic stability and stainable growth.
2.2.4    To foster growth in key sectors of the economy
Under the current tax laws for example, manufacturing companies cited in the regional capitals other than Tema/Accra enjoy a tax rebate of 25%, whiles those located in non- regional capitals enjoy a tax rebate of 50%. Farming enjoys a tax holiday of 10years depending on the nature of farming. Real estate developers enjoy to tax holidays of 5 years whiles hotels industries enjoys 25%, the result increased employment and improve the standard of living.
2.2.5    Regulation
According to sand ford, Godwin and Hardwick (1989) given the general responsibilities, taxation can be a powerful tool in the hands of any government as a means of ensuring that the social political and economic policies of the government in power are brought to fulfillment. From this we can deduce that there are four main of modern tax system.
Revenue rising; historically taxes were raised in order to fund the monarchy and to pay for defense in time of stripe. Revenue rising is still a primary objective of modern tax system to help finance public sector expenditure
Redistribution of income and wealth; the tax system is a means of ensuring the redistribution of income and wealth in order to reduce poverty and promote social welfare.
Economic regulator; the tax system is a means of promoting economic welfare and creates a sound infrastructure for business.
Harmonization; the philosophy of the single market in Europe is to provide for the free movement of the goods, services, capital and people between number states harmonization to be a modern objective of European tax systems.
The rate of tax charged determines the nature of that tax
Progressive tax: A tax is said to be progressive if the rate rises as income rises.
Proportional tax: A tax is proportional if the same percentage of income is paid in taxes regardless of income. The tax rate for a proportional tax remains constant for all levels of income.
Regressive Tax: A tax is regressive when tax rate declines as income rises. In other words, a tax is said to be regressive and not progressive if the lower the income, the higher the proportion of income paid in tax.
Taxes are most commonly classified as either direct or indirect. Example of the former is the income tax and the latter is the sales tax. There is much disagreement among economists as to the criterion for distinguishing between direct and indirect, and it is unclear into which category certain taxes, such as corporate tax and property taxes should be classified. Direct tax is one of the incident of which cannot be shifted by the tax payer to someone else with relative ease.
2.4.1    Direct Taxes
Direct taxes are primarily taxed on persons; they are aimed at the individuals’ ability to pay as measured by his income or his wealth. It is based on the principles of pay as you Earn (PAYE) and it is directly levied on the income earned or to be received. Direct tax is therefore money paid out directly to the government based on what the individual earns. Direct taxes are borne wholly by the individual paying it and it is not transferable but progressive. This tax includes income tax, property rate, gift tax and capital gains tax
2.4.2    Indirect Taxes
Indirect tax is indirectly paid by the final consumer of goods and services. The incidence of the tax can be shifted or transferred to another person who is receiving the goods and services or transaction.
It includes general and selection taxes on sales of consumable goods, value added tax (VAT) on goods in the process of production, taxes on legal transactions, customs duties and excise duties on locally manufactured goods.
The 18th century philosopher, Adam Smith attempted to systematize the rules that should govern a rational system of taxation. Adam Smith put up these three (3) canons which affect the individuals’ ability to pay: These are certainty, convenience and economical which are known as the principle of taxation.
2.5.1    Clarity and Certainty
The application of a tax should be clear and certain. This principle considered very important by smith, has often been underestimated in modern tax system (in which open and impartial administration usually can be taken for granted) where the application of taxes is uncertain and arbitrary, however, public can have no confidence in the system. The old British tax on numbers of house windows was disliked and widely resisted partly because its rationale was unclear likewise, windfall taxes introduced by a government can appear uncertain.
2.5.2    Convenience
Taxes should be easy to calculate and collect. Compliance with income tax laws increased dramatically where a system of deducting tax from earning before they are paid has been introduced.
2.5.3    Economical and Efficiency
A good tax system should be structured so that it can be administered efficiently and economically. Taxes that are costly or difficult to administer divert resources to non­productive uses and diminish confidence in both the levy and the government worse still, waste can also be created by excessive tax rates; economic efforts are then shunted from high-into low-yielding activities, from productive enterprises into tax shelters, and from open, above-transactions into hidden, of-the-record participation in the underground economy.
2.5.4 Fairness
The fundamental importance is that, the tax must be fair – (that is citizens should be taxed in proportion to their abilities to pay (a concept that smith defined so me what ambiguously as “in proportion to the benefit they derive from the government”). As tax is considered fair if those who have the means to pay are assess either in proportion to their capacity to pay, or depending on the situation, in proportion to what they receive from the government. Both “ability to pay” “ability to pay” “benefits received,” therefore, are criteria of fairness. When government services confer identifiable personal benefits on some individuals and not on others, and when it is feasible to expect the users to be bear a reasonable part of cost, financing the benefits is considered fair, as in the repayment of loans to students by subsequent taxation. (Obviously, this method does not apply to such services as public welfare payments). Taxation in accordance with appropriately applied standards of ability to pay or benefit received is said to meet the requirement of vertical equity (because such taxation exact different amount from people in different situations). Just as importance is horizontal equity-the principle that people who are equally able to pay and who benefit equally should be taxed equally.
Many monetary and other valuable receipts are not income but capital in nature. A metaphor used to illustrate the distinction is that of a tree and the fruit. The tree is capital, the fruit is income. Thus if a private individual sells his residence, any profit on the sale is capital, but if he lets it, the rent is income. If the house is not sold out by a private individual but by a speculative builder whose business is the building and selling of houses, then it is obvious that the profit on sales part of his ordinary business income.
The UK courts, in deciding similar points under UK laws, have adopted the distinction drawn by classical economist between fixed and circulating capital. An owner turns to profit fixed capital by keeping, it, circulating capital by parting with it. Receipts from the sale of fixed capital are not taxable. This distinction is equally applicable under the Imo State Decree.
Sectional of the Decreed only taxes income if it is “accruing in, derived from, brought into or received in Imo State”. Section 3 (4) exempt from tax income which is not accruing in or derived from Imo State but is brought into or received in Imo State by person who is not a resident of Imo State. However, there are exemptions and this is by the authority of the legislature, so to say the government of Imo State, has this power under section 3.
The determination of the amount of income which a person receives from a source for a period of time involves taking the income receipts that relates to the source and period and deducting there from the expenses incurred in the production of that income. Expenses may not be deducted which are not incurred in the actual production of the income. It will be noted that as a profit on the sale of fixed assets is not assessable so expenditure on the purchase of fixed assets is not deductible since it is not incurred in the production of income but in acquiring the right or ability to produce the income. Some of the paragraphs of section 4 contain examples of allowable deductions in specific cases as follows:
Paragraph (a) makes deduction for interest on borrowed money depending on the employment of the capital in acquiring the income.
Paragraphs (b) and (c) provide for the rent and repair of building and the repair and renewals of implements etc.
Now this emanates the problem of assessing a person for a year of assessment and the question to be asked is:
“What is the period of the income of which a tax payer or self-employed is to be taxed for this year of assessment?
The answer given by section II is that a tax payer is assessed on the income of the preceding year, subject to certain exceptions. The exceptions which apply only to the opening and closing year of trade, business, profession or vocation provides for the following basis of assessment:
For the first year, the income of the current years.
For the second year, the income of a period of 12 months from the date of commencement.
For both the second and third year, the income of each year, at the option of the tax payer.
For the last year, the income of the current year etc.
It is necessary to aggregate the various amounts of assessable income from different sources. The total so arrived at is known as the tax payers’ total income for the year of assessment.
2.6.1 Income Tax Reliefs
A relief is an approved deductible allowance intended to reduce one’s taxable income and thereby lesson the tax burden. One basic consideration in taxation is the ability to pay. It is therefore the duty of government to ensure that the tax payer has the ability to pay the tax. Accordingly, the personal circumstances of the tax payer are taken into consideration before determining the magnitude of relief.
The following are some of the relief granted in Imo State:
Children Education
Life assurance and social security contribution
Personal (education etc           )
Aged Dependent parents or relatives
In the government is able to deduct tax at source from the income of its employees. Since it is not able to deduct that from self-employed people, it allows that self-employed and companies to make their deductions. For an expense to be allowed it must be wholly, exclusively and necessarily incurred in the production of the income.
The concept of tax evasion is extremely complex. The varied interpretation of the tax evasion is established in the controversy over the operational definition and meaning attached to the avoidance to manipulation of the legal organs of the state to reduce or eliminate the liabilities of the taxpayer, whilst others stress the time dimension as a denominator of assessing tax avoidance. From another angle, tax evasion constitutes failure of the taxpayer, whilst others stress the time dimension as a denominator of assessing tax avoidance. From another angle, tax evasion constitutes failure of the taxpayer to comply with the provisions of the tax laws. Tax evasion occurs when one willfully, whilst others stress the time dimension as a denominator of assessing tax avoidance. From another angle, tax evasion constitutes failure of the taxpayer to comply with the provisions of the tax laws.
Tax evasion occurs when one willfully and consciously fails to notify the taxing authorities of the taxable assets or income activities. Thus it’s a deliberate failure to pay tax legally owed or the use of fraud to conceal the existence of taxable income and/or obtain allowances or the repayment of taxes.
Tax avoidance on the other hand occurs when one arranges his affairs in such a way as to take advantage of weakness or ambiguities in the tax law to reduce his or her tax liabilities, without really breaking the law. Although tax avoidance may be regarded as immoral, the techniques are legal and the conduct involved is not fraudulent. From the tax avoidance point of view, tax payers especially self- employed persons can reduce their tax incidence by taking advantage of the tax relieves, for example paying part of their taxable gains as insurance over or as contribution to the Social Security and National Insurance Trust (SSNIT) pension scheme as security for old age. Tax avoidance is therefore the legal exploitation of the tax regime to one’s own advantage to reduce the amount of tax that is payable by means that are within the law whilst making a full disclosure of the material information to the tax authorities. By contrast tax evasion is a crime in almost all countries and subjects the guilty party to fines or even imprisonment depending on the extent of seriousness and the particular country in question.
Various schools of thought have also defined the term tax evasion. Some include; Kath Nightingale, in her book, Theory and Practice of Taxation, defined tax evasion as the illegal arrangement of taxpayers’ affairs in order to minimize the tax liability. Tax evasion involves the intentional disregard of the legislation in order to escape the liability to tax. It may be achieved by understating income, overstating expenses, the liability to tax. It may be achieved by understating income, overstating expenses, making false claims for allowances or failing to disclose chargeability to tax. Undeclared income probably counts for the bulk of evaded taxes and is referred to as the “black economy” where this sort of tax evasion or moon lighting may be carried out by individuals who are lower paid or unemployed to escape the poverty trap or unemployment trap. It has been suggested that as many as 1.6million workers receive unrecorded income. Johnson C. (1982) Light on the Black Economy Lloyds Bank Economy Bulleting, February states however that, “there is a view that, provided evasion is not widespread, its existence could have the effect of reducing distinctive effects of taxation”. Kay J.A and Kings M.A (1990) the British tax system (5th Edition), Oxford University Press states that “because of its illegal nature, there is little hard evidence as to the true extent of tax evasion in UK with estimates varying between 2-4% of national income”.
Dora Hancock in her book Taxation Policy and Practice (Sixth Edition 1998/99) said, “Tax evasion, unlike tax avoidance is illegal”. For example if a trader conceals some of his/her revenues from the authorities in order to reduce his/her burden of taxation, he/she is evading
tax, but if he/she legally arranges his/her affairs so as to reduce the amount of tax payable, this is tax avoidance and is permissible.
For example a man may transfer investment to his non-working wife in order for the income from them to escape tax.
Tax Default on the other hand is where traders refuse to pay tax at a time limit given. If it happens, then, that person is asked to pay penalty on the tax. Example, on February 9, 1999, the Daily Graphic stated the Customs, Excise and Preventive Service (CEPS) has in a nationwide exercise impounded 301 vehicles whose owners failed to pay the necessary customs duties and about 40 owners of such vehicles have paid 022Omillion in penalties.
2.7.1 Factors that bring about tax evasion, tax avoidance and tax default
Tax evasion, Tax avoidance and Tax default cannot be completely ruled out in any human institution. There are evidence and non-compliance with the tax laws. An informed research shows that advance countries such as Britain and USA lose revenue through tax evasion, avoidance and default the cause of which does not bother on illiteracy. However, in the developing world such as Imo State, the incidence of tax evasion is mainly a deliberate act to cheat the state. Nevertheless there are some isolated cases of tax evasion resulting from illiteracy.
Secondly, the complication in the procedures that a tax payer must follow in order to pay taxes makes him or her evade tax. Also the ineffective techniques put in place causes tax avoidance. This may happen where tax administrators are burdened with many inadequacies especially with logistics.
Improper record keeping also attracts evasion since proper accounts are not kept by most traders, they cannot declare the correct profits at the end of the day. Also people understate their income in order to pay less to IRS. Tax payers ignorance of the benefit derived from public revenue also demoralizes them to settle their tax obligations.
Again the level of confidence built in the tax administrators calls for this problem. When the individuals have the believe that tax collectors do not make proper accounts for whatever they collect to the higher authorities, it demoralizes the tax payers to settle their tax obligations.
Finally, Lack of faith in government’s ability to utilize tax collection for social welfare purposes and absence of any visible benefits to the taxpayers also leads to tax evasion. People are also ignorant about their tax obligations leading to tax evasion.
2.7.2 Existence of income tax evasion
With reference to the Imo Stateian Times issued on Monday, February 2, 1998, the Ketu District Chief Executive expressed concern about income tax evasion and how the people in the district engage in this anti-social act and pointed out the mishaps that it entails. The Imo Stateian times, January 15, 1998 carried a story on revenue collection in the Kwaebibrem District. Since tax collection fell below expectation, development projects in the area were crippled.
The November 2, 1998 edition of the Daily Graphic with its headline “pay all debt now 08 billion”. The paper stated the outstanding tax owed by Stephen Asare, Managing Director of Asare Enterprise, which was originally pegged at 03.2 billion has now short up to 08.02 billion. Initially, on October 23, 1998 the Graphic carried a story on this issue. In the issue, the Graphic wrote; Do all to pay 03.2 billion tax within 48hours or have your properties seized-referring to Asare.
According to section 54 (2) of the income tax decree, 1975 (SMCD) the commissioner is empowered to seize and sell the properties of any defaulting taxpayer to defray the value of the tax.
In the research carried out by Henry Stewards (1978) he noted that about Seven (7) and half percent (7.5%) of Britain’s Gross National Product per annum is evaded as tax. In the USA the loss of revenue through tax evasion estimated to be in the region is between thirteen and seventeen billion dollars ($13b-$17b) per annum.
According to the Graphic Sports, March 29, 1999 issue, Schumacher a coach and former captain of the German National football team was alleged to have evaded 271,000 marks ($151,000) in tax between 1992 and 1994.
On 16th March, 1999, from a radio broadcast, Chain has about 27 million companies in operation but only 8 million of these pay tax to the Government. From the above income tax evasion, avoidance and default are a menace and hence a major factor responsible for the poor revenue mobilization for socio-economic development.
2.7.3 Reasons for income Tax Evasion
Income tax evasion has probably existed as long as those in a position of power have imposed a tax which is ever since the first civilization. From research conducted by Wikipedia, tax evaders are typically motivated by;
Disagreement with the policies of the government or institution that is collecting the income tax.
Tax evader hopes to accomplish may be personal or political or some combination of both.
Some resisters want to “wash their hands” of complicity in immoral government policies by not contributing to funding them.
Some resist taxes as a form of protest that communicates the strength of their opposition through an act of civil disobedience.
Some see income tax evasion as a form of non-violent political force cutting of funds from the government as part of a campaign to force concessions from that government or to cause it relinquish control.
There are many methods of tax resistance. Some are redirection, refusing to pay; paying under protest that is by including protest letter along with their tax forms etc. there are a variety of arguments made for tax resistance. Some of the arguments are as follows:
The government has no legitimate claims to the fruit of ones labour and so taxation is tantamount to exacting from the taxpayer what belongs to him or her
The government engages in immoral unethical and distractive activities.
The government is non-legitimate that is the rulers did not come to power in a legitimate that is the rulers did not come to power in a legitimate or democratic manner (salt Satyagraha).
The government regime in power is corrupt thus serving mainly itsown needs.
The government is controlled by individuals with business interest which unjustly benefits from income tax revenue (conflict or interest).
The size and scope of government have reached levels far beyond that required of the state.
The wealthy or those in power do not pay their “fair share”.
The wealthy or those in power do not pay their “fair share”.
The government is inefficient and wasteful, providing inadequate return of the tax collected.
Many arguments can be made against the above. Most basic, of course, is from those who support the entity collecting the income feel that other people should as well. But even those who are sympathetic with the tax resister’s complaint may question the method.
2.7.4 Effects of Income Tax Evasion
Countries whose citizens evade tax do not have better developmental infrastructure such as hospitals schools, roads, transportation, housing, water, electricity, payment of wages and salaries to public workers etc. which would have otherwise improve the living standard of these citizens. If the right amount of taxes were paid for example, the availability of hospitals will help improve the quality of health care delivery in the country.
In the area of education, apart from the physical structures, government still subsidizes the fees paid by individual students of public schools. The bulk of the country’s agricultural produce comes mostly from the hinterlands or remote areas. The availability of good assessable roads helps to transport these produce with ease to the urban areas. In most developed countries, the government put up apartment from the revenue generated from taxes to accommodate individual citizens at a lower cost compared with privately owned apartments.
Revenue generated by the government through tax is being used to extend electricity, water and other utilities to other parts of the country. Part is also used to subsidize both electricity and water cost to the individual. And efficient tax administration may result into increase in tax revenue. This may have the effect of narrowing the fiscal gap or budget deficit resulting in reduced government borrowing.
Income tax may be used to foster growth of the key sectors of the economy. In Imo State today, the agriculture sector enjoys a tax holiday of either five or ten years depending on their nature. Under the current tax laws, manufacturing companies cited in the regions other than Accra and Tema are to pay tax at the rate of 25% less the existing rate of 25% less the existing rate of such companies. All manufacturing companies located or sited elsewhere are to pay tax at the rate of 50% less than the existing rate of such companies. Also under the investment code, L.I. 1519 of 1991, manufacturing companies engaged in the manufacturing or assembling of electrical or electronic devices, appliances, goods etc. are exempted from corporate income tax for the first five (5) years of operation. Such companies cited in the
Northern, Upper East and Upper West regions are exempted from corporate income tax for the first ten years of operation.
Furthermore, under section 19(2) of the Internal Revenue Act, Act 592, 2000 any expense incurred by a manufacturing company on research and development for the purpose of improving its products is an allowable deduction on its profits if the company can prove the expense.
From the above, it can be concluded that income tax evasion impedes the development of infrastructure of a country. One positive side to tax evasion is that it ameliorates undesirable or unfair tax rules.
2.7.5 Measurement of income tax evasion
A major difficulty in analyzing evasion is in its measurement. After all individuals have incentives to conceal their cheating. Several methods have been developed to measure evasion, all subjects to imprecision and controversy.
One method relies on information generated by the authority as part of its audit process. The internal Revenue conducts line-by-line audit of individual tax return for its Taxpayer compliance Measurement Program (TCMP). This audit yield an estimate of the tax payers “true income”, allowing measures of individual and aggregate tax evasion calculated. However, the audits do not detect all under reported income, non-filers are not often captured and final audit adjustments are not included. Another direct method involves surveys. These surveys are typically designed to illicit tax payers’ attitudes about their reporting but such surveys can also be used to estimate non-compliance. However, the accuracy of surveys if ascertained, individuals may not remember their reporting decisions, they may not report truthfully or at all the respondents may not be representative. In Germany, it has been deemed likely that three hundred thousand workers in the construction industry alone or not reported to tax officials (Keindal 1977).
Michael O Higgers (1980) has revealed methods of meeting tax evasion. One of the most obvious ways to be identified was to trace the relevant tax enforcement statistics. However, he continued that the department’s investigative techniques might change considerably from year to year. Another approach outlined involved micro measures including close examination of the income and expenditure data for a small proportion of the work forces, for example, traders and businessmen that have long been suspected as harboring many tax evaders (Bean 1975).
From the above there is much that we do not know about tax evasion. We are constantly struggling to measure its extent to discover its impact, to estimate individual responses and to implement appropriate policies. As long as there are taxes, this struggle will continue