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Tax Morale and Trust in Public Institutions

Author

Listed:
  • Wilfried Anicet Kouamé

    (GREDI, Universite de Sherbrooke)

Abstract
One significant puzzle in economics is to explain why people pay their taxes and why there are so many differences in tax compliance across countries. Tax morale literature has sought to tackle this puzzle with a sparse evidence from the relationship between taxpayers and public authorities. This paper sheds light on an important channel whereby trust in public institutions raises taxpayers’ willingness to comply. The theoretical framework goes beyond the standard model of tax evasion by allowing both social norms and the interactions with public institutions. The empirical approach uses the World Values Survey 2010-2014 to show the evidence that trust in public institutions increases tax morale. The findings suggest that in both advanced and developing countries, trust in public institutions is a key determinant of tax morale along with the social norms about tax compliance. The paper addresses endogeneity issues between tax morale and trust in public institutions using the historical data on slavery at the ethnic group level and the taxpayers voting behavior. The findings are robust using alternative identification strategy and additional control variables.

Suggested Citation

  • Wilfried Anicet Kouamé, 2015. "Tax Morale and Trust in Public Institutions," Cahiers de recherche 15-14, Departement d'économique de l'École de gestion à l'Université de Sherbrooke, revised Oct 2017.
    • Handle: RePEc:shr:wpaper:15-14
    as

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    File URL: http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-1514.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Konstantinos Fotiadis & Prodromos Chatzoglou, 2022. "The tax morale of exhausted taxpayers. The case of Greece," Constitutional Political Economy, Springer, vol. 33(3), pages 354-377, September.

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    More about this item

    Keywords

    public institutions; signal effects; tax morale; tax evasion; trust;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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