On 27 May, a session of the ISEG Research Seminars will take place from 13.00 to 14.00. The guest speaker will be Chiara Lacava from University of Naples Federico II .
The ISEG Research Seminars are held every week on Wednesdays, with the participation of professors from ISEG, as well as from other Portuguese and international educational institutions.
Title
Local Governors as Tax Enforcers (with Giulia Olivero)
Abstract
This paper evaluates the impact of the Certified Warnings Program, a tax enforcement initiative in Italy that enabled municipalities to collaborate with the national tax authority to detect tax evasion. Using data covering the universe of sole proprietors and a difference-in-differences approach, we find that taxpayers in municipalities that adopted the program reported 3% higher taxable income after its introduction. We also document an increase in the probability of being audited and a corresponding reduction in tax evasion. These results hold when we conduct a similar analysis at the aggregate municipality level. Finally, we examine political outcomes for mayors who implemented the program during their first term and find that they were 8.7 percentage points more likely to be reelected, suggesting substantial political returns to local tax enforcement. Overall, our findings highlight the effectiveness of localized tax enforcement in improving tax compliance and its potential role as a political strategy.
