Graduated penalty scheme

Evaders of any dues such as local council tax, motor vehicle tax, tv license fees etc., if detected, can pay promptly the dues plus any fine or postpone, which usually means a larger fine, and potentially imprisonment if payments are not made in full. We provide a rationale for this graduated penalty scheme, based on criminal tracking costs. Although in conflict with the state's basic objective of deterring evasion, a graduated penalty scheme may emerge as an optimum balance between the dual objectives of deterrence and settlement delay minimization. The analysis also offers insights as to the types of citizens especially responsive to a graduated penalty scheme.