Tax evasion as corruption

Tax evasion leads to inefficient and inequitable outcomes. Because tax evasion erodes tax revenue, the lost revenue is attempted to be made up through high tax rates. An example is real property tax rates in India that range around seven per cent, as opposed to developed countries where it approximates one to two per cent. Note, therefore, that paradoxically, an estimate of tax evasion based on this elevated or artificial or compensating tax rate would yield an exaggerated number. That is, if the tax rate were lower, tax evasion could also be lower. Thus, the consequence of those who get away with it is an extra burden of taxation on those who pay tax.

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