T. Besley, I. Preston and M. Ridge, 1997, "Fiscal anarchy in the UK: modelling
poll tax noncompliance,"
Journal of Public Economics 64, 137-152.
The UK's experience with the poll tax reminds us that even in an economy with a relatively well developed detection and legal system, one cannot take tax compliance for granted. The experience of the poll tax provides a unique opportunity to study many dimensions of tax compliance. We model nonpayment rates in a short panel of data on the English local authorities. The transparent observability of liabilities makes reliable measurement of rates of nonpayment possible. Moreover, these rates rose to unprecedented levels as well as exhibiting considerable variation across authorities. This, together with the variation in local taxes both between districts and over time, creates an ideal opportunity for empirical investigation. Our empirical specification allows us to investigate the determinants of compliance as a function of authority characteristics using socioeconomic and other geographical data. Moreover, the analysis takes seriously the possibility of neighbourhood influences across authority boundaries. Our empirical results confirm the idea that higher taxes lead to larger nonpayment problems and that attempts to enforce compliance can have a positive effect. Political variables are also found to be associated with nonpayment rates. Evidence of influence from neighbouring jurisdictions is also found.
Fiscal Anarchy in the UK
Department of Economics
University College London
Gower Street, London WC1E 6BT