EVASION EFFECTS OF CHANGING THE TAX MIX

This study assesses claims that shift in toward greater indirect taxes will reduce evasion, thereby improving the distribution of real net i ncomes and generating a fiscal dividend' practical considerations sugg est that industry sectors which evade income taxes will also be strong ly inclined to evade indirect taxes on their output A general equilibr ium analysis finds that changing the tax mix will have little or none of the claimed anti-evasion or distributional effects. Increased indir ect taxes on evaders' consumption purchases will be shifted onto suppl iers in the compliant sector Evaders will end up evading less income t axes but evading more indirect taxes.