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Formalisation Through Taxation - Paraguay's Approach and Its Implications (Hardcover, 1st ed. 2019)
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Formalisation Through Taxation - Paraguay's Approach and Its Implications (Hardcover, 1st ed. 2019)
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In developing countries, such as Paraguay, informality remains a
prevalent and persistent issue. Many avoid formal registration with
the authorities and evade tax payments. However, a growing academic
literature argues for an interrelation between a broader tax base
and a country's economic and democratic development. A strand of
this literature focuses on the means of taxing the informal sector
and argues for positive revenue and growth effects. This Palgrave
Pivot analyses Paraguay's 2004 and 2012 tax reforms using both
qualitative and quantitative data. It illustrates that the
country's personal income tax, as well as other alterations in the
tax system, constitute an incentive and nudging mechanism that
leads to a formalisation process of economic activity, and
consequently to a broader tax base. Using interview and tax data,
the book demonstrates how the reform initiates a rising demand of
formalised purchases from both customers and businesses. It further
suggests a potential way of how the taxpayers respond politically
to the enhanced fiscal imperative.
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