Iskandar, Deden Dinar: Dealing With Bribery in an Emission Tax Scheme : Theoretical and Experimental Evidence Based on the Indonesian Case. - Bonn, 2013. - Dissertation, Rheinische Friedrich-Wilhelms-Universität Bonn.
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author = {{Deden Dinar Iskandar}},
title = {Dealing With Bribery in an Emission Tax Scheme : Theoretical and Experimental Evidence Based on the Indonesian Case},
school = {Rheinische Friedrich-Wilhelms-Universität Bonn},
year = 2013,
month = sep,

note = {This dissertation is stemmed from the necessity of finding the optimal mixture of emission tax policies that induces the compliance under the presence of bribery, by taking the case of Indonesia. The Indonesian government has designed the emission tax to prevent environmental degradation attributed to the production process of polluting firm. However, the implementation of emission tax may be impeded by several nonmarket issues. Firstly, there is a contradiction of interests regarding the implementation of tax between the government and the polluting firms. The firms may incline to undertake the actions against the compliance with tax regulation. Secondly, the complication of emission taxation escalates when bribery in the taxation office prevails. The prevalence of bribery is alleged to provide a disincentive for the tax compliance of the firms.
Motivated by the necessity of emission tax and the nonmarket conditions expressed above, the main objective of this dissertation is to provide the clue regarding the optimal emission tax schemes that induce the compliance under pervasive bribery. In particular, this study aims to contribute to environmental policy literature by examining the role of financial reward on emission tax compliance under the presence of bribery. The existing literature mostly examine the impact of corruption and financial reward on compliance in separation, while the combined impact of the reward and bribery has not been investigated.
The objectives of this dissertation are approached using game theoretical and experimental methods. These approaches are useful to predict the performance of new policy designs, where the relevant empirical data have not been established. The common critic on game theoretical approach is that the method relies heavily on the assumption that the economic agents are fully rational and driven by the benefit maximization motive. Therefore, simultaneous use of these approaches is expected to fill the gap between the prediction of optimal decisions and the actual economic behaviour.
Based on the research findings, the proposed emission tax schemes under the presence of bribery and costly monitoring would be a combination of low tax rate, high sanction for evasion, combined with low financial reward for the compliant firms. Enforcement policies directed toward corrupting tax officials that eventually lead to the increase in the cost of bribery is also recommended. Theoretical findings indicate that the optimal mixture of enforcement policy on tax officials consists of a high financial reward for revealing the tax evasion and a lower sanction for taking the bribe.},

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