Kantian–Nashian interaction and petty tax corruption in developing countries

Abstract

Purpose – This paper attempts to develop a simple, static model of tax administration that is capable of explaining the widespread collusive petty tax administration corruption observed in developing countries. Design/methodology/approach – This paper utilizes a positivist research framework and adopts a theoretical method of analysis, although secondary data will also be mentioned to support theoretical arguments whenever it is appropriate to do so. Findings – A high rate of collusive tax corruption is inevitable in developing countries. Research limitations/implications – The model is static and needs to be extended into a dynamic model. Practical implications – Traditional enforcement tools such as higher audits or a higher penalty regime against tax evasion do not work. Tax simplification can lessen the incidence of tax corruption. Social implications – Fighting tax corruption requires significant changes in the attitudes of taxpayers and tax auditors. Originality/value – This paper combines the literature on Kantian economics and tax compliance in an innovative fashion.

Keywords

• Developing countries
• Kantian
• Nashian
• Petty tax corruption