Does Better Information Curb Customs Fraud?
This paper examines how providing better information to customs inspectors and monitoring their actions affects tax revenue and fraud detection in Madagascar. First, an instrumental variables strategy is used to show that transaction-specific, thir...
| Main Authors: | , , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/554091590075089654/Does-Better-Information-Curb-Customs-Fraud http://hdl.handle.net/10986/33817 |
| Summary: | This paper examines how providing better
information to customs inspectors and monitoring their
actions affects tax revenue and fraud detection in
Madagascar. First, an instrumental variables strategy is
used to show that transaction-specific, third-party
valuation advice on a subset of high-risk import
declarations increases fraud findings by 21.7 percentage
points and tax collection by 5.2 percentage points. Second,
a randomized control trial is conducted in which a subset of
high-risk declarations is selected to receive detailed risk
comments and another subset is explicitly tagged for ex-post
monitoring. For declarations not subject to third-party
valuation advice, detailed comments increase reporting of
fraud by 3.1 percentage points and improve tax yield by 1
percentage point. However, valuation advice and detailed
comments have a significantly smaller impact on revenue when
potential tax losses and opportunities for graft are large.
Monitoring induces inspectors to scan more shipments but
does not result in the detection of more fraud or the
collection of additional revenue. Better information thus
helps curb customs fraud, but its effectiveness appears
compromised by corruption. |
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