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Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
1
SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Surveys on social and fiscal fraud: state of the art and lessons for the Belgium Survey
Jozef Pacolet & Sigrid MerckxHIVA Higher Institute of Labour Studies,
Catholic University of Leuven
SUBLEC International workshop on A survey instrument for revealing social and Fiscal FraudBrussels, 25 February 2008, Federal Public Service Social Security
HIVA Catholic University of Leuven - CREPP University of Liège - Centre de sociologie du Travail, de l’Emploi et de la formation, University of Brussels
Federal Public Service Social Security and Federal Science Policy
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Some overview of 24 recent studies using surveysConclusions on design and resultsSome Belgian experienceRelevance for measuring undeclared work,
underground economyConclusions for planned research in Belgium
1. Content
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
2. Overview and titleYear Country Title Authors
1 1980-1994
Denmark Mogensen V./Pedersen S.
2 1981 Norway Survey on the hidden labour market in Norway
Isachsen and Strøm
3 1981-1982
Sweden Laurin
4 1982-1984
Sweden Wahlund
5 1984 Belgium Enquete sur les activités effectuées en dehors du travail
Pestieau
6 1984 Germany Wolff
7 1985 Spain Ministery of Economic Affairs
8 1986-1987
The Netherlands
‘Working in the Netherlands’ Koopmans
9 1988 Belgium Attitude towards the policy of the government, the government’s spending and paying of taxes
Geeroms H.
10 1990 Norway Goldstein
11 1997 Germany Lamnek S., Olbrich G. & Schäfer W.J.
12 1997/1998
Sweden Pedersen S.
13 1998 Sweden Riksskatteverket
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
2. Overview and title14 1999 Belgium Perception of the behaviour of
the government and the justice of the unemployment benefit
Tratsaert K. & De Witte H.
15 2000 Czech and Slovak Republic
Hanousek J. & Palda F
16 2000 Great Britain Pedersen S.
17 2001 Denmark Pedersen S.
18 2001 Germany Pedersen S.
09 1998/2002
Norway Pedersen S.
20 2002 Estonia Working Life Barometer in the Baltic Countries 2002:
Antila J. and Ylöstalo P:
21 2002 Latvia Working Life Barometer in the Baltic Countries 2002
Antila J. and Ylöstalo P:
22 2002 Lithuania Working Life Barometer in the Baltic Countries 2002
Antila J. and Ylöstalo P:
23 2005 Swedish Tax Agency
24 2007 Belgium Eurobarometer: Undeclared work in the European Union
Europese Commissie
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
3. Definition
Broad definitions: undeclared work, underground economy, social and fiscal fraud, illegal activities, evasion Multidimensional phenomena, Many institutions involved (social security,
employment, fiscal)Need for exhaustiveness remains Need for a balanced policy making and policy
debate for fair and efficient taxation and fight against fraud
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Reason: research interest, policy making interest, controllers interest Describing and understanding forms and causes of undeclared
activitiesMeasuring size and structureTargeting audits and improve fight against undeclared workModelling fraud detection and data miningOpinion and value research …is of relevance for policy
making and rising awareness of the fight against undeclared workCould be organised as action research (again marketing
campaigns - might be the role of information and clearing house on undeclared work - cfr. Policies on drugs and alcohol misuse)Relevance of comparability with administrative and macro-
economic information
4. Aim, Use and usability
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
On informal economyUndeclared work (main interest of
Eurobarometer?)Benefit fraudFiscal fraud : undeclared income and or high/false tax deductionsLabour income, other income, VAT, estate taxes,
transfer taxesSome include also avoidance (distinction between
evasion and avoidance sometimes difficult, sometime substitutes)Detailed or not: some surveys included categories
of fraud, non respect of certain types of regulation (make them sector, country specific)
5.1 Topics
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
5.2 Dimensions/ determinants of fraud
Tax morale, culture
Benefit:tax and contributions Level; red tape
Cost: audit probability, Punishment, penalty rate
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
5.3 Target groupHouseholdsFirmsBenefit earnersSampling: self selected, random, proportional,
over weighting categories at risk
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
5.4 Part of undeclared work with population based survey
Type undeclared work
Individual demand
Firm
Demand
Individual (supplier)
Covered from demand and supply side
Covered from demand size
Firm (supplier) Covered from demand size
Not covered
Source: A. Riedmann, Eurobarometer pilot survey,13 December 2007
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
5.5 Target groupTrade off between same as Eurobarometer and
larger sampleVersus broadened scope: looking for
exhaustivenessLimit to supply and or demandOverweigting certain categories, industries
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Focus groupsQualitative opinion research and on facts and
figuresRandom route methodPopulation based
6. Methodologies
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
ExperimentalFace to facePostTelephoneInternet low costMixed mode (internet, post, telephone) Using randomized response techniquesDirect or indirect, open or covert: clear difference
in self reported fraud
7. Mode
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Research institutes and universitiesStatistical officesMarketing institutesIncluded in omnibus or other ongoing regular
surveys
8. Who is doing the survey
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Problems of non-participation, item-non respons, underreporting and underestimation, socially desirable answersShare of population using or supplying
undeclared work:Volume in hours, additional information on black
wages Translated in volume of undeclared work as share
of GDP: lower bound estimates
9. Results: rensponse, size, explanation, problems
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
10.1. Some illustration of the difference in definition and the need of reconciliation
Percentage of persons who are 'self declaring' that their doing undeclared work
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Average hours of those doing undeclared work per year
0
100
200
300
400
500
600
700
10.2. Some illustration of the difference in definition and the need of reconciliation
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Average hours of those doing undeclared work as % of normal paid working hours
0,00
5,00
10,00
15,00
20,00
25,00
30,00
35,00
40,00
10.3. Some illustration of the difference in definition and the need of reconciliation
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Undeclared work of total potential work volume of population15+
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
LV BG
LT HU
EE PL IT
EL NL
DK SK
CZ RO
IE
FR
EU27 PT
BE LU
ES
AT SE
MT
SI D-W
DE
CY FI
UK D-E
10.4. Some illustration of the difference in definition and the need of reconciliation
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Total % of envelope wages
0
2
4
6
8
10
12
14
16
18
RO
LV
BG
P
L L
T IT
E
E
EU27
HU
SK
PT
SI
ES
BE
AT
EL
D-E
F
R IE
CY
CZ
NL
F
I D
E S
E
MT
DK
LU
D-W
U
K
10.5. Some illustration of the difference in definition and the need of reconciliation
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
21
SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Undeclared work of total work volume and total % of envelope wages
0,02,04,06,08,0
10,012,014,016,018,0
RO LV
BG
PL LT
IT EE
HU
EU27 SK
PT EL SI
BE ES
AT NL
FR IE
CZ
DK D-E
SE
LU M
T CY
DE FI
D-W UK
10.6. Some illustration of the difference in definition and the need of reconciliation
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
'Self declared" undeclared work Eurobarometer compared to non-observed economy as % of GDP
0,00
2,00
4,00
6,00
8,00
10,00
12,00
14,00
16,00
18,00
20,00
LV BG LT HU EE PL IT NL CZ RO IE BE ES AT SE
Eurobarometer
UNECE
10.7. Some illustration of the difference in definition and the need of reconciliation
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
Long tradition of scientific interest in social and fiscal fraud Mixed use during this period of as well
administrative information, national accounts, macro-economic estimates and surveysRemarkable persistence of methods and estimates
(or accepted estimate of undeclared work)
11.1 Belgium
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
-Pestieau on informal activities, announced as ‘activities others than (formal) work’-Geeroms (1984) on tax evasion and avoidance, announce as survey on government, government spending and paying taxes-Ver Heyen, Tratsaert, Van Gyes, De Witte (2002) on benefit fraud in unemployment insurance, announced as survey on role of government and justice-Pacolet, Baeyens, 2007, business survey on social fraud announced as study on unfair competition-Perelman used household budget survey to estimate possible undeclared work for self-employed: so
11.2. Belgium : five examples of (using) surveys
Jozef Pacolet, Sigrid Merckx Higher Institute of Labour Studies, Catholic University of LeuvenSurveys on social and fiscal fraud: state of the art and relevance for Belgium
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SUBLEC International Workshop on a survey instrument for revealing social and fiscal fraud Brussels 25 February 2008
12. Some conclusions
Several target groups thinkable: how to be as exhaustive as possible Social and fiscal fraud taken together, even avoidance, and benefit fraud Leave out other criminal activities as well as informal work for own use Should include tax morale, cost and benefits of fraudWhy not label it as a research on the cost and benefits of paying taxes
and the welfare stateHousehold, household and independent worker or firm orientedContradiction between explicit commissioned surveys on fraud and the
need to make it covert, disguisedNow concentrated on households including independent workers, free
professionsImplicitly benefit earners includedNeed to include other groups at risk (as illegal migrants)Potential for other business surveys and surveys within the
inspectoratesAdditional source of information beyond macro-economic, national
accountants and administrative information