Tax amnesty as price-discriminating behavior by a monopolistic government

We consider perfectly anticipated periodic tax amnesties characterized by a tax rate lower than the ordinary one and used by a monopolistic government to maximize net fiscal revenue. We model tax amnesties as a form of intertemporal price discrimination. It turns out that, under certain conditions, discrimination secures the highest net revenue, as amnesties incorporate a self-selection mechanism that renders it possible to collect additional payments from tax evaders, without inducing honest taxpayers to join them. Optimal timing for granting tax amnesties may be calculated, but problems of time inconsistency in government behavior may arise.