FISCAL ANARCHY IN THE UK - MODELING POLL TAX NONCOMPLIANCE

The UK's experience with the poll tax reminds us that even in an econo my with a relatively well developed detection and legal system, one ca nnot take tax compliance for granted. The experience of the poll tax p rovides a unique opportunity to study many dimensions of tax complianc e. We model nonpayment rates in a short panel of data on the English l ocal authorities. The transparent observability of liabilities makes r eliable measurement of rates of nonpayment possible. Moreover, these r ates rose to unprecedented levels as well as exhibiting considerable v ariation across authorities. This, together with the variation in loca l taxes both between districts and over time, creates an ideal opportu nity for empirical investigation. Our empirical specification allows u s to investigate the determinants of compliance as a function of autho rity characteristics using socioeconomic and other geographical data. Moreover, the analysis takes seriously the possibility of neighbourhoo d influences across authority boundaries. Our empirical results confir m the idea that higher taxes lead to larger nonpayment problems and th at attempts to enforce compliance can have a positive effect. Politica l variables are also found to be associated with nonpayment rates. Evi dence of influence from neighbouring jurisdictions is also found.