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Journals / Sosyoekonomi / 2006 / Cilt: 3 - Sayı: 3

Integrating the Informal Sector into the Formal Economy: Some Policy Implications

Vuslat US
Pages
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Publication Date
2006-06-01
DOI
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

Therefore policymakers should seek ways to extend the tax base.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:This study presents a survey of studies on informal sector with special emphasis on country experiences on integration of informal economic activities.
📊
Key Findings & Data:Yet, oversight campaigns targeting informal activities are often overrated by the need to widen the tax base, cut down on tax evasion and punish illegality.
💡
Conclusion & Impact:Therefore policymakers should seek ways to extend the tax base.
🔬Design:Survey & Empirical Study
📍Scope:Comprehensive Sample
⚙️Variables:Domain Parameters

Abstract

This study presents a survey of studies on informal sector with special emphasis on country experiences on integration of informal economic activities. Informal sector is a controversial topic since for many scholars, informal economic activities distort economy while according to others, it may contribute to economic growth. Yet, there is a growing consensus on the necessity to promote the informal sector on account of its importance with respect to employment and poverty issues alike. The previous experiences on integrating informal sector into the formal economy show that formalization schemes are not guaranteed from the viewpoint of the organized sectors, but rather by the benefits that access to formality may bring in fostering the development of informal activities and the relevant parties. Yet, oversight campaigns targeting informal activities are often overrated by the need to widen the tax base, cut down on tax evasion and punish illegality. In the Turkish economy context, the low levels of tax revenues despite high tax rates suggest that Turkish economy is on the right side of the Laffer curve. Therefore policymakers should seek ways to extend the tax base.

Özet

This study presents a survey of studies on informal sector with special emphasis on country experiences on integration of informal economic activities. Informal sector is a controversial topic since for many scholars, informal economic activities distort economy while according to others, it may contribute to economic growth. Yet, there is a growing consensus on the necessity to promote the informal sector on account of its importance with respect to employment and poverty issues alike. The previous experiences on integrating informal sector into the formal economy show that formalization schemes are not guaranteed from the viewpoint of the organized sectors, but rather by the benefits that access to formality may bring in fostering the development of informal activities and the relevant parties. Yet, oversight campaigns targeting informal activities are often overrated by the need to widen the tax base, cut down on tax evasion and punish illegality. In the Turkish economy context, the low levels of tax revenues despite high tax rates suggest that Turkish economy is on the right side of the Laffer curve. Therefore policymakers should seek ways to extend the tax base.

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Cite This Article

US, V. (2006). Integrating the Informal Sector into the Formal Economy: Some Policy Implications. Sosyoekonomi, Cilt: 3 - Sayı: 3. https://ajindex.com/articles/139683

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References (9)

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