Monitoring Expenditures on Tax Collection and Tax Evasion: The Case of Iran

T he main aim of this paper is analyzing the relationship between tax evasion and the monitoring expenditure on tax collectionin Iran. For doing so, we have used a simulation model for determining optimal level of monitoring expenses on tax collection. The results showed that, a greater portion of government expenses must be allocated to monitor the tax collection, although do this reduces tax evasion, but have a negative effect on economic growth. Thus, instead of  increasing monitoring expenses in line with reducing tax evasion, it is better to reduce taxes rate in a way that in addition not to decrease in motivation of economic agents activity, it also causes decrease in motivation of tax evasion.

Keywords:

Keywords: Tax Evasion , Tax Rate , Monitoring Expenditure on Tax Collection , economic growth , Iran. JEL Classification: C۰۲ , C۱۱ , C۶۱ , H۲۶ , O۴۰