Abstract
We study a tax evasion response to car taxes in Finland, where used car importers overstate the mileage to reduce tax liability. First, we develop a tax evasion measure by comparing reported mileage upon import with subsequent information from vehicle inspections, and find that a decline in mileage — “missing miles” — occurs frequently. Second, we analyze a tax rate increase, and observe a reduction in the number of imported used cars, but only among non-evaders. Finally, we analyze an RCT informing some potential importers about a program of inspections that uncovers true odometer readings, and the results suggest that third-party reporting reduces evasion.
| Original language | English |
|---|---|
| Article number | 104108 |
| Journal | Journal of Public Economics |
| Volume | 181 |
| DOIs | |
| Publication status | Published - Jan 2020 |
| Externally published | Yes |
| Publication type | A1 Journal article-refereed |
Funding
We are grateful to the Finnish Customs for providing us with data as well as for co-operating with us in performing the RCT. The RCT is registered in the AEA RCT Registry with the unique identifying number of “AEARCTR-0002591”. We also thank the Finnish Transport and Safety Agency for providing us with data, and the Academy of Finland (grant no. 277287 and no. 299373 ) for partially funding the project. Harju gratefully acknowledges funding from the Foundation for Economic Education . Furthermore, we acknowledge the many helpful comments from numerous conferences and seminars. Appendix A
Keywords
- Car tax
- Enforcement measures
- Tax evasion
ASJC Scopus subject areas
- Finance
- Economics and Econometrics
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