Presumptive Income Taxation: Administrative, Efficiency, and Equity Aspects

Abstract

This paper discusses assessment of income on the basis of approximate indicators as opposed to convent ional records. Such a method of assessmenl, known as presumptive income taxation, is widely used in many developing and industrial countries; however, it has been neglected in public finance Literature. In most cases the presumptive approach has been followed for administrative reasons, but this paper argues that more attention should be paid to the efEiciency implications of presumptive taxes.