Taxes are paid because of expected punishment

Abstract

Taxes or levies have been around in some form or other for a long time-and, thus, so has been the problem that people have an incentive to avoid this tax burden. Tax authorities’ efforts to collect taxes have, correspondingly, always been present and, given the temptation to cheat, also been quite pronounced. In democracies, tax revenues allow for the provision of public goods, and, thus in turn, governments are interested in avoiding tax evasion.