Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142168
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2015
Citation: 
[Journal:] Economic Change and Restructuring [ISSN:] 1574-0277 [Volume:] 48 [Issue:] 2 [Pages:] 169-185
Abstract: 
This paper provides a quantitative evaluation of the welfare effect of the introduc- tion of proportional taxation in Bulgaria in 2008, an effect that operates through the grey economy channel. Using a general-equilibrium model, augmented with informal sector, a computational experiment is performed to evaluate the welfare gain from the adoption of proportional taxation. The lower effective tax burden in the new tax regime produces a relocation of people into the official sector, stimulates investment, and increases output and consumption. Finally, under the flat tax regime, the size of the informal sector is smaller, and quantitatively consistent with OECD (2009) and European Commission (2012) figures.
Subjects: 
taxation
informal sector
labor reallocation
welfare gains
JEL: 
D91
O41
Persistent Identifier of the first edition: 
Additional Information: 
this is the accepted version of the manuscript at the Economic Change and Restructuring
Document Type: 
Article

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