Spatial Dynamic Modelling of Tax Gap: the Case of Italy

Alfonso Carfora; Rosaria Vega Pansini; Stefano Pisani

doi:10.18778/1231-1952.25.1.02

Authors

Alfonso Carfora Italian Revenue Agency, Via Cristoforo Colombo, 426, 00145 Rome, Italy
Rosaria Vega Pansini Italian Revenue Agency, Via Cristoforo Colombo, 426, 00145, Rome, Italy
Stefano Pisani Italian Revenue Agency, Via Cristoforo Colombo, 426, 00145, Rome, Italy

DOI:

https://doi.org/10.18778/1231-1952.25.1.02

Keywords:

determinants of tax gap, spatial econometrics, panel estimation

Abstract

This paper analyses the determinants of regional tax gap in Italy testing if tax evasion is characterised by spatial persistence. The size of spatial correlation in regional tax gaps has been tested and the role of additional determinants of evasion over the period 2001–2011 has been estimated. Using a dynamic spatial panel model, it is shown that regional tax gap is determined by tax evasion in neighbouring regions and is characterised by spatial persistence. Results make it possible to draw a taxonomy of the determinants of regional tax gap: contextual factors and operational factors linked to the relative efficacy of tax evasion contrasting policies and geography.

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