Simplified Tax Regimes and Small Taxpayer Compliance: Fiscal Efficiency under Administrative Stress

Abstract

Simplified tax regimes have been widely adopted to enhance compliance among small taxpayers while reducing administrative complexity and enforcement costs. This study examines the effectiveness of simplified taxation frameworks in promoting fiscal efficiency under conditions of administrative stress, characterized by limited institutional capacity, economic volatility, and high informality. Using a mixed-methods approach that combines longitudinal fiscal data analysis with institutional performance indicators, the paper evaluates compliance behavior, revenue stability, and administrative resilience over time. The findings indicate that simplified regimes can significantly improve voluntary compliance and broaden the tax base when supported by clear

eligibility criteria, predictable tax liabilities, and low compliance costs. However, the results also reveal structural trade-offs, including revenue concentration risks and vulnerability to macroeconomic shocks. Administrative stress emerges as a critical moderating factor, influencing both enforcement effectiveness and taxpayer trust. The study contributes to the public finance literature by highlighting the conditions under which simplified tax systems achieve sustainable fiscal outcomes. Policy implications emphasize the need for adaptive administrative capacity, data integration, and periodic regime recalibration to balance equity, efficiency, and revenue adequacy in environments with constrained institutional resources.