Estimating aggregate tax compliance cost: a new approach using a state space model

Wu, H and Tran-Nam, B 2017, 'Estimating aggregate tax compliance cost: a new approach using a state space model', Australian Tax Forum, vol. 32, no. 1, pp. 197-224.


Document type: Journal Article
Collection: Journal Articles

Title Estimating aggregate tax compliance cost: a new approach using a state space model
Author(s) Wu, H
Tran-Nam, B
Year 2017
Journal name Australian Tax Forum
Volume number 32
Issue number 1
Start page 197
End page 224
Total pages 28
Publisher Taxation Institute of Australia
Abstract This article aims to develop a general statistical method for estimating tax compliance costs in Australia on an annual basis. The proposed approach represents an attractive alternative to the traditional, large-scale survey method which is known to be expensive and time-consuming to conduct. A state space mode is applied to a series of tax administrative costs, approximated by annual expenditures incurred by the Australian Taxation Office. This produces estimated annual growth rates of Australian's tax compliance costs. Combining the growth rates obtained from the state space model with a comprehensive survey-based estimate of tax compliance costs in a particular year, an annual series of tax compliance costs can then be generated. Note that the proposed method has general applicability and the use of Australian data is a mere illustration.
Subject Taxation Accounting
Keyword(s) tax administrative costs
tax compliance costs
tax system complexity
state space model
Copyright notice © 2017 Taxation Institute of Australia
ISSN 0812-695X
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