The thesis evaluates the effectiveness of the official zakat policy in Pakistan in delivering welfare and justice to poorer sections of society over the period 1980-1994. The thesis contrasts the idealistic and theological aspirations of Islamists regarding zakat with the practical outcomes of zakat policy in Pakistan. It also compares zakat policy outcome with the objectives of the government. It is argued that the performance of zakat can be easily manipulated and influenced because it is not only a welfare instrument but also a political tool in the hands of the Islamic state, and thus can be used to advance political ends entirely divorced from the specific welfare goals of zakat. The lack of clarity of Shariah regarding zakat's aspirations for welfare and justice can facilitate this politicisation of the zakat policy. The thesis also argues that the religious nature of zakat does not guarantee automatic compliance with zakat policy, and that if individuals are to internalise the welfare goals of zakat it is necessary for them to have trust in the Islamic state's commitment to these goals. The thesis shows that in Pakistan the Islamic state manipulated zakat policy formation and that there existed a lack of commitment on its part regarding zakat which hampered zakat's effectiveness. This is visible in the shape and the process of zakat policy formulation which demonstrates that the ideals of zakat policy were sacrificed by Zia's Islamic state to gain political patronage and power. This had huge negative implications for the workability and effectiveness of zakat. An analysis of micro-data derived from Household Income and Expenditure Surveys for Pakistan from 1985 to 1994 reveals that zakat failed to exploit the wealth of the rich, with the heaviest incidence being borne by the lowest income groups. Zakat disbursements seemed inadequate and were less than 30% of the poverty line for the respective years. Additionally, there was non-negligible mis-allocation of zakat funds towards higher income households. Zakat achieved some minor alleviation of poverty but its impact was unimpressive regarding reduction in the poverty gap and reduction of the poverty headcount measure. Regarding inequality, the thesis uses the Atkinson-Kohl inequality index and shows that zakat managed to create a positive statistical impact but the improvement was marginal. It seems that most of the time zakat was being taken from the poor and disbursed among them as well.

In tax administration, costs are borne by two principal parties: tax raising departments of Government and tax payers themselves. Government costs are the subject of regular statistical reports but little is known of the so-called hidden costs falling on tax payers: the costs of complying with taxes imposed by the Government, The thesis examines these two aspects of tax operating costs with particular reference to personal taxation in the UK. The approach adopted specifically recognises that cost is only one criterion for evaluating administrative efficiency. The criterion of effectiveness (the degree to which actual revenues collected approach potential revenues) is integrated within a theory of tax costs. The behavioural factors which underlie effectiveness are examined in a fairly lengthy digression in Chapter 2. Chapter 3 returns to the analysis of costs with a discussion of questions of principle and problems of measurement encountered in previous compliance cost studies. This paves the way for a discussion of recent empirical work on the compliance cost of personal taxation in the UK in Chapter 4. Chapter 5 sets out the methodological issues likely to be encountered in applying a system of productivity measurement to the Inland Revenue. Chapter 6 starts with a discussion of the shortcomings of current information concerning administrative costs of direct taxation in the UK. It then attempts to apply a rough form of productivity measurement to the Inland Revenue along the lines suggested in the previous Chapter and ends with an evaluation from published sources of recent changes in Inland Revenue efficiency.

The Nigerian economy is heavily dependent on oil as 80% of its revenue currently comes from this sector. However, tax revenue has never played a strong role in the country's management of fiscal policy and this is an issue of fundamental importance for development. Tax revenue is a predictable and sustainable source of income particularly given the high number of corporations operating in the country, some of which are multinational. Company Income Tax (CIT) can be a good source of government revenue, while also promoting economic growth, investment and the creation of job opportunities. Nigeria, like many developing countries, lacks an efficient tax collection system leaving a high proportion of company income tax uncollected as a result of avoidable leakages and corruption. The efficiency and effectiveness of company income tax collection depend on the medium of collection, and could be enhanced using Information and Communications Technology (ICT) as a driver, as is currently the case in developed countries. Within the context of ICT integration in the public sector (e-government), this thesis identifies the impact of ICT on the collection of company income tax in Nigeria. Using the Technology Acceptance Model and the Theory of Planned Behaviour as the study’s underpinning frameworks, this research adopted a mixed method approach and collected data through 230 returned questionnairesand 4 in-depth semi-structured interviews. The data was entered and analysed in the Statistical Package for Social Scientists (SPSS) programme (version 21) using non-linear Regression (correlation) for Propositions 1- 4 and multinomial regression for proposition 5. The study found that the level of effectiveness of revenue collection realized increased as a result of use of ICT in company income tax collection. This is due to the elimination of leakages and human error, and protection of revenue by transferring all payments to the Central Bank of Nigeria. The study also found that company income tax revenue increased in 2007 from N332billion to N846.6billion in 2012, and that the Federal Inland Revenue Service surpassed its 2014 target by N400 billion or 9.32 per cent, generating about N4.69 trillion. Of this, N1.18 trillion was collected from company income tax in 2014, compared to the N1.03trillion in 2013, based on a quarterly revenue report released in Abuja and reported by Customs Today on 31 January 2015. It found that the use of ICT in CIT collection has improved transparency; taxpayers pay into the designated banks online and obtain a receipt immediately. The Federal Inland Revenue Service’s software monitors the entire process and traces payments to ensure accuracy; the banks then transfer the money to the Central Bank of Nigeria. The e-tax payment system was found to give the federal government a real time, almost minute by minute, report on taxes paid by taxpayers and receipted by the Federal Inland Revenue Service. The findings revealed that ICT also has the potential to improve interactions between the tax authority and taxpayers, fostering transparency and accountability in the administration of company income tax collections. This study also found that information disseminates from the tax authority to company income taxpayers through radio and websites, publication and information requests submitted by the taxpayers and queries answered by tax officials. The results obtained indicated that using ICT facilitates the CIT collection process and predicted potential contribution to the effectiveness and efficiency in CIT collection in terms of the skills, opportunities and resources required. This study has contributed to the limited body of work in this area and employed an extended version of the much studied Technology Acceptance Model (TAM) in order to produce insights into the impact of ICT on company income tax collection in Nigeria. The study model postulates that the adoption of ICT in CIT collection is determined by perceived usefulness and perceived ease of use, attitude, intention to use and accessibility in terms of affordability and infrastructure. There are obvious restrictions of time and inadequate funds as with other doctoral research works. This study was limited to the impact of ICT on company income tax collection, but other directions for future research are the impact of ICT on collection of other taxes such as petroleum profit tax collection in Nigeria.

The work developed in my PhD on “Networks, Social Information and Compliance” focuses on compliance (voluntary and non), diffusion of information and spillovers in diverse network structures. More specifically, we test experimentally how minimal social information is diffused through different network structures and its role on increasing the level of efficiency along with its positive effect on voluntary compliance of emergent social norms and tax compliance. In the first two chapters, we implement a networked version of the trust game with two senders and one receiver. We manipulate in a minimal way the social information available in the network and, the novelty of our work consists in the introduction of non-binding suggestion about the level of trust and trustworthiness, which is totally fair and (partially) efficient. It is also manipulated in the two studies the selection mechanism of the roles in the game by introducing social status. Our findings suggest that social information has a positive and significant effect on increasing the level of trust in the network. The non-binding suggestion has also a positive and significant effect on individual decisions. In the last chapter, we study in a laboratory experiment how tax compliance information is diffused in a fixed-six-nodes circle network. The game has four information conditions: No Info, Full Info, Positive Info and Negative Info. In the No info treatment, subjects get individual information about whether they were audited, the outcome of it and her final payoff. In the Positive Info (Negative Info) treatment, participants get information whether adjacent connected nodes were audited and found compliant (noncompliant). In the Full Info, participants get both positive and negative signals. We control for the effect of signals on participants’ beliefs on the ex-ante fixed and unknown audit probability by an incentive compatible mechanism. The tax rate and fine rate are fixed and known by the subjects. Our findings suggest that positive and negative signals have a significant effect in the levels of reporting and compliance at individual level. Indeed, diffusion of non-strong negative signal (one bad example) has a negative effect on individuals’ tax compliance. The diffusion of strong positive signals (two good examples) is required to generate any increase in compliance decisions within networks.

This thesis investigates empirically the effects of taxation policy on invest- ment and growth. Chapter 1 analyses whether there is any link between the structure of the tax system and the level of income per capita in the long run. Our specification closely follows that of Arnold et al. (2011), measuring tax structure using the shares of different taxes in total revenue. However, based on panel data for 17 OECD countries over the period 1970-2004, we do not find a robust ranking of different types of taxes in terms of their effects on the long-run level of income per capita, as this previous study suggested. In Chapter 2, we estimate the long-run elasticity of the capital stock with respect to the user cost of capital by combining industry-level panel data from the EU KLEMS database with tax variables provided by the Oxford University Centre for Business Taxation for 13 OECD countries over the period 1982-2007. Our estimated long-run user cost elasticity is significantly different from zero and close to -1, suggesting that aggregate investment is highly responsive to tax incentives summarised by the tax-adjusted user cost of capital. In Chapter 3, we estimate the long-run elasticity of capital with respect to the user cost using firm-level panel data from the Amadeus database for 9 countries over the period 1999-2008. Consistent with our findings in Chapter 2, we estimate a substantial long-run u~er cost elasticity which is significantly different from zero and close to -1. The main empirical results in both Chapters 2 and 3 are found to be robust to a wide range of econometric issues and different model specifications.

This study adopted a positivistic paradigm and employed mixed research methods in data collection and analysis. Covering seven tax regions in Tanzania, surveys and semi-structured interviews were administered to collect data from 205 VAT registered SME taxpayers and 32 Tanzanian Revenue Authority (TRA) tax officials respectively. A deductive logic guided the statistical testing of a range of hypothesised relationships between tax compliance factors and nine measures of VAT compliance in Tanzania. The researcher identified tax compliance factors from economic and behavioural theories of tax compliance and the general tax literature. Content analysis of qualitative data provided results to corroborate the results from statistical analysis of quantitative data. The findings of the current study indicate partial ability of the economic theory to explain VAT compliance in a developing country, Tanzania. Based on the economic theory, findings indicate several (but not all) factors were associated with VAT compliant behaviour (e.g. perceived detection likelihood and perceived influence of VAT sanctions). Furthermore, the compliance factor that was more significant and indicated a more consistent association with measures of VAT compliance was the perception that collected VAT is a business asset. This finding adds to the existing evidence that shows most SMEs taxpayers fail to differentiate between business money and VAT money. In addition, not all the associations between compliance factors and measures of VAT compliance were consistent with the economic theory predictions. Overall, while this study contributes to the empirical evidence that supports the applicability of tax compliance theories in a developing country context, it is the behavioural theory of tax compliance that appears to have more support from the current study’s findings than economic theory of tax compliance. One key difference between the current study and other studies in developing countries is the mixed approach adopted in investigating VAT compliance. The approach has helped the researcher to investigate the phenomenon of VAT compliance in a much broader way, and generated broader understanding and explanation of the factors influencing VAT compliance, which might be unique for developing countries. In addition, the current study captures the fragmented and less developed characteristic of tax system in a developing country context by testing the compliance factors’ association with compliant behaviour at the different stages of the VAT compliance cycle (i.e. from the initial stage of identifying/registering taxpayers to the final stage where tax authorities collect/receive VAT revenues). Consequently, the research finds taxpayers’ compliance behaviour to be different at every stage of the VAT compliance cycle. For example, compared to female taxpayers, male taxpayers were less compliant during VAT registration (early stage of the VAT compliance cycle), but became more likely to be compliant by agreeing that they were less likely to make intentional mistakes to reduce VAT liability (later stage of the VAT compliance cycle). Likewise, older SMEs taxpayers were more compliant by voluntarily registering for VAT purpose (early stage of the VAT compliance cycle) but indicated that they were more likely to submit their VAT returns late (later stage of the VAT compliance cycle), which is a VAT non-compliant behaviour. Based on this, uniquely compared to other studies the findings indicate taxpayers’ compliance behaviour could change from being compliant to being non-compliant even within one VAT complying circle. In conclusion, the overall findings of this study contribute to the limited body of knowledge of VAT compliance in developing countries context. The study also contributes to the knowledge of existing tax theories applicability to both VAT compliance and developing countries context.

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Tax evasion is one of the key challenges for the policy makers. Designing the optimal tax code requires assessment of taxpayers’ compliance behavior. Tax rate, detection intensity, penalty rate - are some of the characteristics considered in models of tax evasion. The central question in tax evasion literature is how changes in fiscal policy parameters affect evasion. The literature on tax evasion can be categorized into two broad groups. The first strand of literature is based on expected utility theory (EU) and the second strand approaches the evasion problem from a behavioral perspective. This dissertation uses a behavioral approach to study tax compliance behavior and contributes to the second group of the literature. The second chapter of this dissertation investigates tax compliance behavior of individuals with reference dependent preferences and endogenous reference point. The results are derived for the three personal equilibrium concepts of Kőszegi and Rabin (2007). The effects of tax policy parameters on compliance are found qualitatively similar to the results under EU. Do taxpayers change their tax compliance behavior after the announcement and before the actual enforcement of a new tax rate? This is the central question of the third chapter. Using cumulative prospect theory framework and a reference point adaptation process, the answer is that evasion in the transition period increases following the announcement of the tax rate reduction or increase. An increase in the tax rate increases evasion, whereas reduction of the tax rate reduces evasion in the long run. The final chapter of this dissertation develops a model of tax compliance behaviour with endogenous social norms. The implications of the model are that the tax policy parameters not only shape monetary (dis)incentives for compliance, but also determine the strength of the social norm of compliance. The social norm of compliance is weaker under the higher tax rate and the norm is stronger under the stricter tax enforcement regime.

This dissertation presents the findings of a research study that has identified the main ways in which South African large companies in the manufacturing sector avoid taxes and measures the size of the tax gap. Specifically the study examines the motor vehicle manufacturers, automotive component manufacturers and packaging manufacturers. The study primarily deals with tax avoidance arising from transfer pricing manipulations among both foreign owned and South African owned Multinational Enterprises (MNEs). The literature review covered in the study includes; public value and strategic management in the public sector; measuring the tax gap; compliance risk management; tax avoidance; General Anti-avoidance Rules (GAARs); transfer pricing and competition for foreign direct investment (FDI). The study presents rich data collected from nine case studies for the period 1998 to 2005. The key findings for this period include; (i) The tax gap is estimated at 214% and 30% of the taxes declared and paid on a timely basis by the car manufacturing sector and the packaging manufacturing sector respectively. (ii) The estimated amount of money lost from the South African economy through manipulation of transfer prices is R39.565 billion (about £2.6 billion) with corporate income tax implications of R14.404 billion (£960 million). (iii) For every R1 of motor industry programme incentive given to three car manufacturers (excluding VAT refunds), the government has lost approximately R2 through transfer pricing. (iv) FDI appears to have taken more out of the South African economy than it had put in, Some analyses show that there is negative invested capital among the three car manufacturers. (v) Foreign-controlled multinational enterprises avoided more taxes than SA-controlled multinationals. The taxes avoided by foreign-controlled multinationals represented 4.56% of the company turnover between 1998 and 2005 while the taxes avoided by SA-controlled multinational enterprises were 0.69% of turnover. (vi) Statistically, in the car manufacturin'g sector, there is a strong positive correlation of 87% between the amount of taxes avoided and the amount of annual incentive bonuses approved by the parent companies for distribution among employees of the SA subsidiaries, including some senior management. In a regression analysis, the amount of taxes avoided explains 75% of the variability in the level of incentives bonuses. The study recommends that the SA Government should set up an 'Incentive Risk Management' committee. It calls for more contact and dialogue between the Commissioner of South African Revenue Service (SARS) and the CEOs of the car manufacturers and encourages the setting up of an Enforcement Centre of Excellence within SARS. It also provides suggestions on reducing the tax gap and recovering lost taxes while effectively managing the threat of disinvestment or capital flight.

Research in taxation often treats it as a branch of law or economics, but in this thesis I argue that this obscures the fact that tax systems are not based on scientific, techno-rational principles, but are socially constructed phenomena, embodying fundamental, value-based decisions imbricated in power relationships. I demonstrate that throughout history tax systems have reflected the prevailing state form and the dominant power relationships underpinning them and that we are currently living in a neoliberal state, in which societal relations are determined by economic principles. I therefore argue that the UK tax system tends to be utilized to encourage individuals to engage in economic, entrepreneurial activity and are presented as being governed by techno-rational, economic principles, but are, in fact, a rationalizing discourse for the transfer of power from labour to capital and from poorer to wealthier taxpayers. This transformation is underpinned by the exercise of power, but in a neoliberal state power operates in a covert, capillary fashion through assemblages and the construction of knowledge, rather than in an overt, hierarchical fashion. I demonstrate how the contemporary debates relating to tax simplification and the use of general principles rather than detailed rules in tax legislation have been, or might be, used to further entrench neoliberal values in the tax system, but that the failure to achieve significant simplification due to its open and transparent nature demonstrates the limits of power and the more opaque nature of general principles might have more potential for achieving this. However, no power can be absolute and I argue that the increased public interest in and awareness of taxation since 2010, which led to the emergence of UK Uncut, demonstrates that there is always the potential for resistance to a hegemonic discourse, which may lead to the emergence of alternative discourses.