Narrow Results

We mainly study a taxpayer's optimal strategies of tax evasion and its relevant properties, in order to deduce some effective suggestions and theoretical bases for the tax authority to restrain tax evasion. Based on the Christiansen static model of tax evasion, we formulate a two-period model where the discovery of tax evasion in the second period induces a tax audit in the first period if it has not been done before. The taxpayer has to choose the amount of tax evasion in each period to maximize the total expected utility of the two periods. We show that the threat of having the first-period evasion discovered in the second period diminishes attractiveness of tax evasion in both periods. We also discuss the policy of audit power enhancement, where the audit probability in the second period will be increased if tax evasion is discovered in the first period. We find that this policy may play two roles. First, it can reduce the incentive of tax evasion in the second period if tax evasion is discovered in the first period. Second, a high potential increase of the audit probability may contain tax evasion in the first period but may cause more evasion in the second period.

In the Durban climate change conference of UNFCCC in 2011 new accounting rules were agreed for forest sector in Annex I countries to provide incentives for forest management and emission mitigation. There was also pressure to modify accounting rules to avoid giving credits for sequestration which would occur naturally. New accounting rules are based on reference levels against which greenhouse gas emissions and sinks resulting from forest management are compared during the second commitment period (2013–2020) of the Kyoto Protocol. In this study we investigate the timber market impacts and the effectiveness of the reference level policy in promoting forest management actions in the EU countries. We also study how setting of caps for policy-based gains affects the effectiveness of the policy. We found that the policy enhances carbon sequestration, if it is implemented in such a way that it affects harvests. The market impacts and the effects on forest sinks can be substantial in countries where non-LULUCF sector emissions are high relative to the potential of forest resources to act as sinks. In smaller countries with relatively large forest resources, the effectiveness of the policy is dampened by upper limits imposed on the emission compensations. The results of our study can be used to improve the effectiveness of policies in climate change negotiations.