Working Papers and work in progress:
Peer-reviewed publications:
Kotsogiannis, C., Salvadori, L., Karangwa, J., and I. Murasi (2025): "E-INVOICING, TAX AUDITS AND VAT COMPLIANCE", Journal of Development Economics, 172, 103403.
Dissemination: VoxDev; WP version
ABSTRACT: Difficult to find another policy shift that has promised as much for tax compliance in developing countries as digitalization. Yet the evidence on its impact is scant. Using the universe of tax filings in Rwanda over the period 2012-2019, this paper investigates the extent to which digitalization (in the form of e-invoicing) has impacted on VAT compliance and in particular the effectiveness of tax audits. The evidence suggests that on the aggregate e-invoicing adoption has increased firms' net VAT payments and has improved the efficiency of VAT audits. It is also shown that e-invoicing has a sizeable impact on VAT liabilities reported by audited firms, with this impact being attributed to tax audits being more efficient rather than to VAT registered firms becoming more compliant following their adoption of e-invoicing.
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2025): "DISCOVERING TAX DECENTRALIZATION: DOES IT IMPACT MARGINAL WILLINGNESS TO PAY TAXES?", Economia Politica, 42, 265–295.
ABSTRACT: Decentralized fiscal decision-making should serve to enhance welfare. Thus, individuals are assumed to be willing to pay, at least, no less taxes than those they pay in a centralized system. We test this hypothesis by means of a survey experiment, leveraging the process of tax decentralization that has unfolded in Spain over the last 25 years and where there are two alternative regional financing regimes, with substantial differences. Our results suggest that individuals have very limited awareness of the tier of government to which they pay either the personal income tax (PIT) or the value added tax (VAT), frequently assuming taxes to be centralized. This holds true in common regime regions but even in regions where tax decentralization is maximum, as is the case of Spain’s foral communities. On ‘Discovering Decentralization’ (i.e., being informed that a tax is more decentralized than initially perceived), individual’s marginal willingness to pay taxes of common regime residents has a positive shift in PIT, while there is no evidence for VAT. Tax mix matters.
Kotsogiannis, C., Salvadori, L., Karangwa, J., and T. Mukamana (2024): "DO TAX AUDITS HAVE A DYNAMIC IMPACT? EVIDENCE FROM CORPORATE INCOME TAX ADMINISTRATIVE DATA", Journal of Development Economics, 170, 103292.
Dissemination: VoxDev
ABSTRACT: Making use of a unique administrative data set consisting of the universe of administrative filings in Rwanda, this paper investigates the impact of tax audits on businesses’ reporting behaviour. The evidence suggests that tax audits have a positive impact on corporate income and corporate tax liabilities reported for three years after the start of the audit process. The results also suggest that the type of audit matters. While ‘comprehensive’ tax audits have a significant positive effect on compliance, ‘narrow-scope’ tax audits exhibit both a positive and a negative effect during a three-year period after the audit, with the net impact being negative. The implication of this, from a tax compliance perspective, is that ‘narrow-scope’ audits are ineffective and that doing more of those and less of comprehensive ones might have a negative impact on tax compliance. Effective tax compliance strategy therefore requires the careful evaluation of all types of audits.
Rees-Jones, A., Piolatto, A., D'Attoma, J. and L. Salvadori (2022): "EXPERIENCE OF THE COVID-19 PANDEMIC AND SUPPORT FOR SAFETY-NET EXPANSION", Journal of Economic Behavior & Organization, 200, 1090-1104.
An earlier version of this paper was circulated under the title: "COVID-19 CHANGED TASTES FOR SAFETY-NET PROGRAMS", NBER Working Paper No.27865.
Dissemination: VoxEu, LaVoce.info
Media coverage: New York Times (Oct. 23, 2020), Foreign Policy, MedicalXpress.com, MarketWatch.com, NetNebraska.org
ABSTRACT: Did individuals’ experiences with the harms of the COVID-19 pandemic influence their attitudes towards safety-net programs? To assess this question, we combine rich information about county-level impacts and individual-level perceptions of the early pandemic, repeated measurements of attitudes towards safety-net expansion, and pre-pandemic measurements of related political attitudes. Individuals facing higher county-level impact or greater perceived risks are more likely to support long-term expansions to unemployment insurance and government-provided healthcare when surveyed in June 2020. These differences persist across time, with experiences in the early months of the pandemic remaining strongly predictive of attitudes towards safety-net expansion in early 2021.
Piolatto, A., D Montolio and L. Salvadori (2022): "FINANCING PUBLIC EDUCATION WHEN ALTRUISTIC AGENTS HAVE RETIREMENT CONCERNS", Economic Inquiry, 60, (4), p. 1559-1580.
ABSTRACT: We study, theoretically and empirically, the link between voters' support for public education and pensions. We show that the (inter-generational) redistributive component of the retirement system creates a link between current spending on education and future pensions. Specifically, investments in education increase the young's productivity and, hence, future tax proceeds that will finance the current workers' pension. Consequently, the support for publicly financed education grows together with the generosity and degree of redistribution of the retirement system. The empirical analysis uses repeated cross-country surveys to confirm the model predictions.
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2020): "CYCLICAL TAX ENFORCEMENT", Economic Inquiry, 58 (4), 1874-1893.
ABSTRACT: We wonder whether tax enforcement varies along the economic cycle and aim at answering that question from a positive perspective by means of survey data for the Spanish case (1994-2015). According to a fiscal capacity argument, tax enforcement might be stronger in times of crisis (counter-cyclical), but if the tax administration prioritizes taxpayers’ welfare over public revenue, enforcement might be slacker (pro-cyclical). We find tax enforcement is not immune to the state of the economy. In particular, it presents a prevailing counter-cyclical trend, but in presence of a severe economic crisis it turns out to be pro-cyclical.
Salvadori, L. (2020): "THE IMPACT OF TERRORISM ON TAX ENFORCEMENT EFFECTIVENESS: A CASE STUDY OF THE BASQUE COUNTRY AND NAVARRE", Regional Studies, 54 (10), 1425-1441.
An earlier version of this paper was awarded the Epainos Prize for Young Scientist by the 55th ERSA Congress Committee.
Media coverage: [1] & [2].
ABSTRACT: This paper analyses the impact of terrorism on tax enforcement effectiveness by focusing on the case of the Basque Country and Navarre. The reduced-form model shows that terrorism negatively affects tax enforcement set by the regional administration and, consequently, the way it is perceived by residents in this area. These results are tested by using Spanish surveys and other data sources, finding evidence of the negative impact of terrorism on tax enforcement as it is perceived by residents in the Basque Country and Navarre. In particular, this effect is stronger for entrepreneurs and liberal professionals. Instead, no significant impact for individuals resident in the rest of Spain is found.
Durán-Cabré J.M., A. Esteller-Moré, Mas-Montserrat, M. and L. Salvadori (2019): “THE TAX GAP AS A PUBLIC MANAGEMENT INSTRUMENT: APPLICATION TO WEALTH TAXES”, Applied Economic Analysis, 27 (81), 207-225.
Media coverage: [1], [2] & [3].
ABSTRACT: The tax gap can be defined as the difference between the total amount of taxes collected by tax authorities and the total tax revenues that should be collected according to the tax code and under perfect tax compliance. The estimation of the tax gap offers very useful information about the relative size and nature of non-compliance, as well as its evolution over time. In this paper we point out that the tax gap is a valuable instrument not only to define the enforcement strategies of the tax administration but also to enhance the accountability of this public authority. Nonetheless, the methodology employed to estimate the tax gap and consequently the interpretation of the results of this assessment are subject to limitations that are discussed in the paper. Moreover, we present the methodology to estimate the tax gap in Catalonia for the three most important taxes related to wealth (wealth tax, inheritance and gift tax and transfer tax) administered by the Spanish regions and, finally, we provide the results from the estimations obtained employing microdata (Spanish working paper version here).
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2016): “EMPIRICAL EVIDENCE ON TAX COOPERATION AMONG SUB-CENTRAL ADMINISTRATIONS”, Journal of Tax Administration, 2 (2), 24-46.
ABSTRACT: The literature on horizontal tax interdependence pays limited attention to interactions in administrative policies, although they can play a large role in determining the amount of tax revenues collected. We investigate the incentives for sub-central tax authority cooperation in a decentralized context, with the aim of identifying the determinants of that cooperation. Our results are congruent with standard theory; in particular, the existence of reciprocity is essential for sharing tax information, but there is sluggishness in this process, which is partly the result of the short-sighted behaviour of tax authorities influenced by budget constraints. Hence, this is good news for the functioning of a decentralized tax administration, as in the medium-long run the gains to be made from sharing tax information are achieved.
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2015): “EMPIRICAL EVIDENCE ON HORIZONTAL COMPETITION IN TAX ENFORCEMENT”, International Tax and Public Finance, 22 (5), 834-860.
ABSTRACT: Tax auditing parameters have been largely overlooked by the literature as policy-making instruments of any relevance; however, enforcement strategies are critical elements of the tax burden. In this paper we show that, in a federal framework, tax auditing policies can serve as additional tools for regional interaction. We examine the presence of this interaction by adopting a spatial econometric approach. We employ a spatial panel autoregressive model and obtain results that are congruent with standard theory, corroborating the presence of horizontal competition between regions in their tax auditing policies. We also find that once regional governments acquire legal power, the opaque competition in enforcement policies appears to switch in part to a more transparent competition in statutory tax parameters.
Introductions to special issues (guest editorship):
Kotsogiannis, C., L. Salvadori (2024): "SYMPOSIUM ON FISCAL CAPACITY, TAX COMPLIANCE, AND DEVELOPMENT", CESifo Economic Studies, 70 (4), 486–489.
ABSTRACT: This CESifo Economic Studies Symposium brings together insightful research exploring the interconnections between fiscal capacity, tax compliance, and development. The contributions span diverse approaches, methodologies, contexts, and policy challenges, offering fresh insights into how tax systems can be leveraged to promote efficiency and equitable growth. The four articles selected for this symposium exemplify the depth and breadth of the field, addressing both theoretical underpinnings and practical applications, and providing direction for future research.
Other writings:
- "THE IMPACT OF TAX AUDITS ON SMALL ENTERPRISES: COMPLIANCE GAINS OR BACKFIRING?" (with C. Genakos, and C. Kotsogiannis), WP coming soon.
- “WEALTH TAX ENFORCEMENT: THE ROLE OF TAX AND INSTITUTIONAL DESIGN”. (with J.M. Durán-Cabré, A. Esteller-Moré, C. Kotsogiannis), WP coming soon.
- "EXPLORING THE DOSAGE DYNAMICS OF TAX AUDITS: EVIDENCE FROM UGANDA" (with C. Kotsogiannis, J. Pirttilä, and D. Henning), WP coming soon.
Peer-reviewed publications:
Kotsogiannis, C., Salvadori, L., Karangwa, J., and I. Murasi (2025): "E-INVOICING, TAX AUDITS AND VAT COMPLIANCE", Journal of Development Economics, 172, 103403.
Dissemination: VoxDev; WP version
ABSTRACT: Difficult to find another policy shift that has promised as much for tax compliance in developing countries as digitalization. Yet the evidence on its impact is scant. Using the universe of tax filings in Rwanda over the period 2012-2019, this paper investigates the extent to which digitalization (in the form of e-invoicing) has impacted on VAT compliance and in particular the effectiveness of tax audits. The evidence suggests that on the aggregate e-invoicing adoption has increased firms' net VAT payments and has improved the efficiency of VAT audits. It is also shown that e-invoicing has a sizeable impact on VAT liabilities reported by audited firms, with this impact being attributed to tax audits being more efficient rather than to VAT registered firms becoming more compliant following their adoption of e-invoicing.
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2025): "DISCOVERING TAX DECENTRALIZATION: DOES IT IMPACT MARGINAL WILLINGNESS TO PAY TAXES?", Economia Politica, 42, 265–295.
ABSTRACT: Decentralized fiscal decision-making should serve to enhance welfare. Thus, individuals are assumed to be willing to pay, at least, no less taxes than those they pay in a centralized system. We test this hypothesis by means of a survey experiment, leveraging the process of tax decentralization that has unfolded in Spain over the last 25 years and where there are two alternative regional financing regimes, with substantial differences. Our results suggest that individuals have very limited awareness of the tier of government to which they pay either the personal income tax (PIT) or the value added tax (VAT), frequently assuming taxes to be centralized. This holds true in common regime regions but even in regions where tax decentralization is maximum, as is the case of Spain’s foral communities. On ‘Discovering Decentralization’ (i.e., being informed that a tax is more decentralized than initially perceived), individual’s marginal willingness to pay taxes of common regime residents has a positive shift in PIT, while there is no evidence for VAT. Tax mix matters.
Kotsogiannis, C., Salvadori, L., Karangwa, J., and T. Mukamana (2024): "DO TAX AUDITS HAVE A DYNAMIC IMPACT? EVIDENCE FROM CORPORATE INCOME TAX ADMINISTRATIVE DATA", Journal of Development Economics, 170, 103292.
Dissemination: VoxDev
ABSTRACT: Making use of a unique administrative data set consisting of the universe of administrative filings in Rwanda, this paper investigates the impact of tax audits on businesses’ reporting behaviour. The evidence suggests that tax audits have a positive impact on corporate income and corporate tax liabilities reported for three years after the start of the audit process. The results also suggest that the type of audit matters. While ‘comprehensive’ tax audits have a significant positive effect on compliance, ‘narrow-scope’ tax audits exhibit both a positive and a negative effect during a three-year period after the audit, with the net impact being negative. The implication of this, from a tax compliance perspective, is that ‘narrow-scope’ audits are ineffective and that doing more of those and less of comprehensive ones might have a negative impact on tax compliance. Effective tax compliance strategy therefore requires the careful evaluation of all types of audits.
Rees-Jones, A., Piolatto, A., D'Attoma, J. and L. Salvadori (2022): "EXPERIENCE OF THE COVID-19 PANDEMIC AND SUPPORT FOR SAFETY-NET EXPANSION", Journal of Economic Behavior & Organization, 200, 1090-1104.
An earlier version of this paper was circulated under the title: "COVID-19 CHANGED TASTES FOR SAFETY-NET PROGRAMS", NBER Working Paper No.27865.
Dissemination: VoxEu, LaVoce.info
Media coverage: New York Times (Oct. 23, 2020), Foreign Policy, MedicalXpress.com, MarketWatch.com, NetNebraska.org
ABSTRACT: Did individuals’ experiences with the harms of the COVID-19 pandemic influence their attitudes towards safety-net programs? To assess this question, we combine rich information about county-level impacts and individual-level perceptions of the early pandemic, repeated measurements of attitudes towards safety-net expansion, and pre-pandemic measurements of related political attitudes. Individuals facing higher county-level impact or greater perceived risks are more likely to support long-term expansions to unemployment insurance and government-provided healthcare when surveyed in June 2020. These differences persist across time, with experiences in the early months of the pandemic remaining strongly predictive of attitudes towards safety-net expansion in early 2021.
Piolatto, A., D Montolio and L. Salvadori (2022): "FINANCING PUBLIC EDUCATION WHEN ALTRUISTIC AGENTS HAVE RETIREMENT CONCERNS", Economic Inquiry, 60, (4), p. 1559-1580.
ABSTRACT: We study, theoretically and empirically, the link between voters' support for public education and pensions. We show that the (inter-generational) redistributive component of the retirement system creates a link between current spending on education and future pensions. Specifically, investments in education increase the young's productivity and, hence, future tax proceeds that will finance the current workers' pension. Consequently, the support for publicly financed education grows together with the generosity and degree of redistribution of the retirement system. The empirical analysis uses repeated cross-country surveys to confirm the model predictions.
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2020): "CYCLICAL TAX ENFORCEMENT", Economic Inquiry, 58 (4), 1874-1893.
ABSTRACT: We wonder whether tax enforcement varies along the economic cycle and aim at answering that question from a positive perspective by means of survey data for the Spanish case (1994-2015). According to a fiscal capacity argument, tax enforcement might be stronger in times of crisis (counter-cyclical), but if the tax administration prioritizes taxpayers’ welfare over public revenue, enforcement might be slacker (pro-cyclical). We find tax enforcement is not immune to the state of the economy. In particular, it presents a prevailing counter-cyclical trend, but in presence of a severe economic crisis it turns out to be pro-cyclical.
Salvadori, L. (2020): "THE IMPACT OF TERRORISM ON TAX ENFORCEMENT EFFECTIVENESS: A CASE STUDY OF THE BASQUE COUNTRY AND NAVARRE", Regional Studies, 54 (10), 1425-1441.
An earlier version of this paper was awarded the Epainos Prize for Young Scientist by the 55th ERSA Congress Committee.
Media coverage: [1] & [2].
ABSTRACT: This paper analyses the impact of terrorism on tax enforcement effectiveness by focusing on the case of the Basque Country and Navarre. The reduced-form model shows that terrorism negatively affects tax enforcement set by the regional administration and, consequently, the way it is perceived by residents in this area. These results are tested by using Spanish surveys and other data sources, finding evidence of the negative impact of terrorism on tax enforcement as it is perceived by residents in the Basque Country and Navarre. In particular, this effect is stronger for entrepreneurs and liberal professionals. Instead, no significant impact for individuals resident in the rest of Spain is found.
Durán-Cabré J.M., A. Esteller-Moré, Mas-Montserrat, M. and L. Salvadori (2019): “THE TAX GAP AS A PUBLIC MANAGEMENT INSTRUMENT: APPLICATION TO WEALTH TAXES”, Applied Economic Analysis, 27 (81), 207-225.
Media coverage: [1], [2] & [3].
ABSTRACT: The tax gap can be defined as the difference between the total amount of taxes collected by tax authorities and the total tax revenues that should be collected according to the tax code and under perfect tax compliance. The estimation of the tax gap offers very useful information about the relative size and nature of non-compliance, as well as its evolution over time. In this paper we point out that the tax gap is a valuable instrument not only to define the enforcement strategies of the tax administration but also to enhance the accountability of this public authority. Nonetheless, the methodology employed to estimate the tax gap and consequently the interpretation of the results of this assessment are subject to limitations that are discussed in the paper. Moreover, we present the methodology to estimate the tax gap in Catalonia for the three most important taxes related to wealth (wealth tax, inheritance and gift tax and transfer tax) administered by the Spanish regions and, finally, we provide the results from the estimations obtained employing microdata (Spanish working paper version here).
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2016): “EMPIRICAL EVIDENCE ON TAX COOPERATION AMONG SUB-CENTRAL ADMINISTRATIONS”, Journal of Tax Administration, 2 (2), 24-46.
ABSTRACT: The literature on horizontal tax interdependence pays limited attention to interactions in administrative policies, although they can play a large role in determining the amount of tax revenues collected. We investigate the incentives for sub-central tax authority cooperation in a decentralized context, with the aim of identifying the determinants of that cooperation. Our results are congruent with standard theory; in particular, the existence of reciprocity is essential for sharing tax information, but there is sluggishness in this process, which is partly the result of the short-sighted behaviour of tax authorities influenced by budget constraints. Hence, this is good news for the functioning of a decentralized tax administration, as in the medium-long run the gains to be made from sharing tax information are achieved.
Durán-Cabré, J.M., Esteller-Moré, A. and L. Salvadori (2015): “EMPIRICAL EVIDENCE ON HORIZONTAL COMPETITION IN TAX ENFORCEMENT”, International Tax and Public Finance, 22 (5), 834-860.
ABSTRACT: Tax auditing parameters have been largely overlooked by the literature as policy-making instruments of any relevance; however, enforcement strategies are critical elements of the tax burden. In this paper we show that, in a federal framework, tax auditing policies can serve as additional tools for regional interaction. We examine the presence of this interaction by adopting a spatial econometric approach. We employ a spatial panel autoregressive model and obtain results that are congruent with standard theory, corroborating the presence of horizontal competition between regions in their tax auditing policies. We also find that once regional governments acquire legal power, the opaque competition in enforcement policies appears to switch in part to a more transparent competition in statutory tax parameters.
Introductions to special issues (guest editorship):
Kotsogiannis, C., L. Salvadori (2024): "SYMPOSIUM ON FISCAL CAPACITY, TAX COMPLIANCE, AND DEVELOPMENT", CESifo Economic Studies, 70 (4), 486–489.
ABSTRACT: This CESifo Economic Studies Symposium brings together insightful research exploring the interconnections between fiscal capacity, tax compliance, and development. The contributions span diverse approaches, methodologies, contexts, and policy challenges, offering fresh insights into how tax systems can be leveraged to promote efficiency and equitable growth. The four articles selected for this symposium exemplify the depth and breadth of the field, addressing both theoretical underpinnings and practical applications, and providing direction for future research.
Other writings:
- VV.AA. (2021): "STUDY ON FUTURE TRENDS AND TAXATION", Publications Office of the European Commission, (Catalogue number: KP-02-21-759-EN-N), pp. 1-225. ISBN: 978-92-76-38743-5.
- VV.AA. (2017): "LITERATURE REVIEW ON TAXATION, ENTREPRENEURSHIP AND COLLABORATIVE ECONOMY", TAXATION PAPERS, No 70 – 2017, Publications Office of the European Commission, pp. 1-259. ISBN: 1725-7565 (PDF); 1725-7557 (Printed).
- Durán-Cabré J.M., L. Salvadori (2017): “ANÁLISIS ECONOMICO DE LA ADMINISTRACIÓN TRIBUTARIA”, Papeles de Económia Española, November 2017, 154,112-130.
- Arachi, G., L. Salvadori (2017): “REGIONALISMO DIFFERENZIATO E RISORSE FINANZIARIE”, Éupolis Policy Paper 17/9, November 2017.
- VV.AA. (2016): "CÀLCUL DEL SALARI DE REFERÈNCIA DE L´ÀREA METROPOLITANA DE BARCELONA", KSNET & Daleph for Àrea Metropolitana de Barcelona.
- VV.AA. (2016): "CUANTIFICACIÓN DE MEDIDAS FISCALES Y DE PROTECCIÓN SOCIAL", KSNET for Save the Children.
- Salvadori, L. (2015): “TAX ADMINISTRATION AND TAX AUTONOMY”, Info IEB 2015/22.
- VV.AA. (2011): "THE ROLE AND IMPACT OF LABOUR TAXATION POLICIES", Publications Office of the European Commission, pp. 1-262.
- Casarico, A., Profeta, P. and L. Salvadori (2009): “DONNE AL VERTICE DELLE IMPRESE E AZIONI POSITIVE: UNA SINTESI”, Econpubblica Short Note n.7, November 2009.
- Salvadori, L. (2009): “PENSION SYSTEMS IN A GENDER PERSPECTIVE”, mimeo (2009).
