Analyzing Factors Affecting Tax Morale Levels in Turkey Using Alternative Ordered Response Models

Dilek Özdemi̇r,Ali Kemal Çeli̇k,Serap Bedi̇r Kara

doi:10.24193/tras.57e.6

Dilek Özdemi̇r, Ali Kemal Çeli̇k + Show 1 more

Open Access

https://doi.org/10.24193/tras.57e.6

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Abstract

The concept of tax morale is introduced to measure the reason of paying taxes by subjects. The main objective of this paper is twofold. Firstly, the present paper examines potential factors that may influence the degree of tax morale in Turkey. Secondly, the paper aims to determine the best model to explain the determinants of the degree of tax morale by a comparison of alternative ordered response models. For these purposes, a written-questionnaire was administered to 943 subjects in three cities of northern Turkey, namely, Erzurum, Erzincan, and Bayburt. Standard ordered probit (OPROBIT) and alternative ordered response models including generalized ordered logit model (GOLOGIT), partial proportional odds (PPO) model and heteroskedastic ordered logit (HOLOGIT) model were performed to determine the best model fit. Results reveal that marital status, monthly income, and operation time were positively correlated with higher degrees of tax morale. The empirical findings also indicated that higher educated subjects were more likely to have lower degrees of tax morale. Tax amnesty, higher tax load, tax system, tax policies, previous negative experiences, and efficient use of public expenditures were found to have statistically significant impact on the degree of tax morale among subjects

Highlights

Tax morale is commonly described as taxpayers’ intrinsic motivation to pay taxes (Frey and Torgler, 2007; Lubian and Zarri, 2011; Lago-Peñas and Lago-Peñas, 2010)
Tax morale is regarded as an important determinant of explaining the high degree of tax compliance in many country cases with low deterrence level (Lisi, 2015), while some earlier research (Baldry, 1986; Cummings et al, 2009; Blaufus et al, 2015) highlights the relationship between the concept of tax morale and its significant role in explaining observed tax evasion
According to the Nomenclature of Territorial Units for Statistics (NUTS) 2 classification of Turkey, the three selected cities are located in TRA1 sub-region of Turkey

Summary

Introduction

Tax morale is commonly described as taxpayers’ intrinsic motivation to pay taxes (Frey and Torgler, 2007; Lubian and Zarri, 2011; Lago-Peñas and Lago-Peñas, 2010). The degree of tax morale is commonly considered to explain the reason of paying taxes by individuals (Russo, 2013; Slemrod, 2007). A recent study (Lubian and Zarri, 2011) indicates that individuals pay taxes due to their willingness, namely the sense of moral obligation, and the corresponding evidence is discussed under positive hedonic effects. As an individual attitude, the high degree of tax morale does not always guarantee the high degree of tax compliance as an individual behavior (Lisi, 2015). Torgler and Schneider (2009) find strong evidence that higher degrees of tax morale and institutional quality provide a smaller shadow economy

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Conclusion