Citizen profiles based on social capital in the Spanish fiscal context: Profile development and multivariate consistency analysis

Political economy of corruption: the case of tax evasion in Bangladesh

It is widely believed that the tax base in most developing countries has been severely eroded by legal tax avoidance and illegal tax evasion, brought about largely by poor' tax administration.1 This erosion, it is thought, has had a variety of fiscal effects: tax revenues are lost and the growth of the tax base is dampened, the progressivity implied by the statutory rate structure is not achieved, the costs of tax administration are increased, and horizontal and vertical equity suffer because the effective tax rates faced by individuals depend largely upon their success in playing the tax compliance game. It is not surprising, therefore, that virtually all fiscal reform programs in developing countries start with the promise to improve administration. Better administration is a discretionary government action that at once can lower the tax rate, increase revenues, slow capital flight, and improve the fairness of the system. Yet tax base erosion in developing countries is something about which precious little is known, and, in particular, the empirical evidence about the severity and the nature of the problem is all but nonexistent.2 Why do we know so little about the dimensions of the evasionavoidance problem? One reason is conceptual problems in measuring erosion of the tax base. For example, how does one estimate the substitution of nontaxable for taxable compensation in response to the tax structure, or the extent to which a higher marginal tax rate has induced individuals to report less of their taxable income? Another reason is the problem of comparability across countries. The many legal and

Many governments worldwide are concerned about tax evasion and avoidance, which has been studied extensively over the years. The primary goal of this research is to convey Albanian citizens’ and taxpayers’ perspectives on tax evasion, avoidance, and compliance. Several studies are being conducted worldwide to assess the public’s perception of demographic factors influencing tax evasion and avoidance. The principal indicators used in this paper, such as the attitude toward tax evasion and tax avoidance, are based on individual taxpayer perceptions rather than real evidence. This issue is particularly acute in many developing and developed economies, including Albania. Tax evasion erodes the government’s ability to raise revenue impartially and cost-effectively. Tax evasion creates inequality among citizens/taxpayers and economic difficulties for the country. Because of the lower revenue generated by tax evasion, the state coffers cannot provide public services such as health, transportation, and justice that are tailored to the needs of taxpayers and the contributor’s rights. However, current research into the factors influencing tax evasion and avoidance in Albania is still limited. We analyzed data from a survey sent to 387 individual taxpayers in Albania to achieve our goals. We discovered relationships between socio-demographic factors and their impact on an individual’s ethical perception of tax avoidance and evasion using empirical analysis. For the statistical analyses in this paper, we used Fisher’s Exact Test on count matrices using R studio and JMP statistical software. Based on our empirical findings, we concluded that gender, marital status, level of education, and residential area all impact tax compliance and ethics. While there is a statistically significant relationship between employment status and influence on tax evasion and avoidance, insufficient evidence demonstrates a trend. No statistically substantial dependence was found for the age determinant. The study’s findings may be helpful to researchers, policymakers’ institutions, and practitioners.

Tax morale is defined as the intrinsic motivation to pay taxes, and is closely related to tax compliance. Determinants of tax morale need to be investigated for a more comprehensive understanding of tax compliance. In this paper, determinants of tax morale in Turkey and Spain are analysed on the basis of World Values Survey data. Firstly, descriptive statistics of the variables used in the models are provided. Since tax morale is an ordered categorical dependent variable, ordered probit models are estimated separately for Turkey and Spain to derive the relations between tax morale and relevant variables. Marginal effects are computed since the coefficients of the models cannot be interpreted because of the nonlinearity of the estimated models. The marginal effects related to the top level of tax morale category are presented. The independent variables are combined by demographic factors, employment categories, economic status of the respondents and social capital variables. The findings from the estimated model suggest that social capital variables and some of the demographic factors have important effects on tax morale in Turkey. Confidence variables have positive effects; if taxpayers feel confidence in political entities they are willing to pay taxes. Religion and national pride affect tax morale positively. On the other hand, the results are different for Spain; social capital variables do not have effects on tax morale. Specifically, confidence variables are found to be statistically insignificant. Age, education level and the income level have significant effects on tax morale in Spain.

Tax avoidance and tax evasion pose significant threats to economic stability and fiscal integrity worldwide. This study explores the key drivers influencing taxpayer behavior, including tax policy complexity, public trust, digitalization, cultural attitudes, and international cooperation. Using a systematic literature review, this study synthesizes findings from recent empirical research to analyze global trends in tax compliance. The results indicate that unclear and inconsistent tax policies contribute to avoidance, while technological innovations such as AI-driven audits and digital reporting enhance compliance. Societal factors, including tax morale and governance quality, significantly impact tax behavior, with corruption and regulatory inefficiencies exacerbating non-compliance. Cross-country comparisons reveal that developed economies with strong enforcement mechanisms experience lower tax evasion, whereas developing nations struggle with institutional weaknesses. The study highlights the need for transparent and simplified tax policies, enhanced digital tax infrastructure, and stronger international cooperation to mitigate tax avoidance. Future research should incorporate primary data analysis to refine policy recommendations and explore regional variations in tax compliance. Addressing these challenges requires an integrated approach that combines legal, technological, and educational interventions. Strengthening enforcement mechanisms and fostering tax awareness among citizens are critical to ensuring a fair and sustainable tax system.

Objective: Measuring tax compliance and evasion is particularly challenging because tax evaders have a strong incentive to conceal their actions. While assessing any crime presents similar difficulties, tax evasion is unique in that it lacks identifiable victims, meaning there are no victim reports or surveys to gather data from. However, unlike most crimes, changes in tax evasion can be observed through fluctuations in reported tax bases. The fear of punishment and potential social stigma makes many taxpayers reluctant to provide truthful responses, even in surveys conducted by organizations not affiliated with tax authorities. Consequently, almost all empirical studies on tax compliance and evasion, even the most reliable ones, lack an accurate measure of compliance and evasion. Voluntary tax compliance as a function of the tax rate is a critical determinant of tax revenue collection. As a result, a model and estimation methodology have been developed in this article to explore this relationship. Methods: This research offers a novel methodology for estimating tax compliance and the underground consumption by theoretically introducing and empirically estimating a tax compliance function for the cigarette industry in Pakistan. Results: In Pakistanʼs cigarette industry, the tax compliance rate is 11.53%, and 37.5% of cigarette consumption is underreported in surveys. Conclusion: Fractional compliance is inversely related to the tax rate. Tax revenue initially increases with higher tax rates, reaching a peak before declining as the tax rate rises. On the other hand, gross domestic product (GDP) behaves oppositely to the tax revenue. The highest GDP occurs at either a 0% or 100% tax rate, where tax revenue is zero. As the tax rate rises, GDP decreases initially until it reaches a minimum, after which it begins to increase again, eventually reaching its peak at a 100% tax rate at a specific point in time. This contrasts with the Laffer Curve, which suggests that a decrease in the supply of goods leads to lower tax revenue as the tax rate increases. (JEL A14, H19, H83)

The tax compliance literature indicates that many factors, including economic, social, psychological and demographic factors, have an impact on the compliance behaviour of taxpayers. Of the two main compliance theories, the economic deterrence theory model and social/fiscal psychology theory model, this study has adopted the latter. The aim of this study was to examine whether or not a relationship exists between selected tax compliance variables (both economic and non-economic) and the attitudes and behaviour of Australian individual taxpayers, with an emphasis on which variables also act as an effective deterrent to non-compliance. This study adopted a mixed method research approach. First, a quantitative component comprising a mail survey was distributed to a sample of known tax evaders (i.e., those who had been audited and penalised) via the databases of the ATO. This was followed by an electronic version of the survey which was distributed to a sample of the general population (non-evaders) via the databases of a market research company. Second, a qualitative component comprising six tax evader and seven non-evader semi-structured interviews were conducted over the phone and in person to support and cross-validate the previous survey findings. The variables of interest in this study were the moral values of taxpayers, their perceptions of fairness and specific deterrent measures. Eight demographic variables were also examined in conjunction with the compliance variables. The survey data was statistically analysed using Chi-Square and Logistic Regression and, for a comparative analysis between the two different samples, Mann-Whitney U Tests were employed. For the interview data, thematic framework analysis was utilised along with the pattern-matching technique. Based on both components of the research method, there was evidence of a significant relationship between tax morals, tax fairness and tax law enforcement and compliance behaviour in the evader sample. With respect to the non-evader sample, there was a significant relationship reported between tax penalties, tax morals and tax awareness and compliance behaviour. No significant results were reported for the probability of detection and compliance behaviour in either sample. However, there was some evidence of a relationship between the selected compliance variables themselves, for example, tax fairness and tax morals. Other major findings included the influence of the gender variable on selected compliance variables for both the evader and non-evader samples, while both the income and education variables significantly impacted upon compliance behaviour but mainly in the evader sample. The results of all other demographic variables were not significant. In distinguishing between the two taxpayer samples, all compliance variables except tax morals and tax penalties produced statistically significant differences. Likewise, amongst the eight demographic variables, statistically significant differences were reported for six, with only location and return lodgement being similar amongst the samples. Consequently, the findings of the study suggest that tax morals and, to a lesser degree, tax fairness, tax law enforcement, tax awareness, gender, education and income level, directly and indirectly influence compliance behaviour. It is envisaged that the results of this study provide useful information for the Australian revenue authority and have implications for tax policy development.

The “tax gap”—the difference between the amount of “true tax” and the amount of tax actually paid—has garnered widespread attention in recent months. Much of the commentary on the subject equates the tax gap with “tax evasion,” a term broadly understood to connote intentional (and potentially criminal) underreporting. This paper cautions against conflating the tax gap with tax evasion. The tax gap includes substantial gray areas where the law is ambiguous and the IRS’s determination of “true tax” is debatable. On top of that, the IRS’s methodology for measuring the tax gap includes upward adjustments that are recommended by front-line examiners but reversed on administrative appeal or judicial review. Moreover, a substantial portion of the estimated tax gap is derived from a statistical technique called “detection controlled estimation” that potentially magnifies the impact of later-reversed recommendations on the ultimate tax gap measure. Weighing in the opposite direction, the IRS’s approach to measuring the tax gap excludes some amounts that clearly constitute tax evasion (most significantly, underreporting of tax on illegal-source income). Understanding the tax gap’s shades of gray can inform discussions of tax law and policy. We explain how proposals to use the tax gap as a performance target may produce perverse incentives for the IRS. We further explain how additional IRS funding—though necessary to improve the agency’s ability to enforce the tax laws—may have counterintuitive effects on the estimates of the tax gap. We also illustrate—using examples from the taxation of passthrough entities—how legislative reforms can reduce the size and scope of legal gray areas that contribute to the tax gap. Our analysis highlights the importance of increased IRS funding levels and substantive tax law changes as complementary strategies for improving tax compliance.

Individual income tax compliance has been one of the most significant applications of Becker's [6] economic approach to criminal activity and punishment. This paper considers an approach to optimal audit policies that relies on the distribution of risk aversion among taxpayers and is consistent with some stylized facts about the U.S. tax system. Rather than considering the tax evasion situation as a game between the tax collector and identical taxpayers, this model has the tax collector choose an audit probability to maximize expected tax revenues net of audit costs knowing that each taxpayer has a reservation audit probability-the smallest audit probability that would evoke truthful reporting-depending on how averse to risk she is. As the heterogeneity in the population vanishes, this problem becomes the same as the tax compliance problem analyzed in Graetz, Reinganum, and Wilde [9]. This paper extends earlier contributions by analyzing income tax evasion and compliance with a population that is heterogeneous with respect to risk aversion. How other parameters of the problem influence optimal audit probabilities as well as the equilibrium proportion of tax evaders will be explored. The diversity in preferences over lotteries leads to some interesting comparative static results. For example, the impact of an increase in the penalty for lying is ambiguous in this model. The graphical approach taken here allows us to identify the relevant factors and how they interact. Additionally, this analysis makes it clear why the distribution of risk aversion in the population affects the equilibrium audit probability, but not the proportion of tax evaders. This problem has been approached in several different ways.1 For example, Clotfelter [7], Slemrod [15], Aim and Beck [2], and Witte and Woodbury [16] have studied this phenomenon econometrically, but the dearth of reliable data has made empirical analysis difficult. Other economists-most noteworthy, Alm, McClelland, and Schulze [5] and Alm, Jackson, and McKee [4]have taken a different tack, employing the methods of experimental economics. While these seminal studies have shed substantial light on taxpayer behavior, a leap of faith is required to extrapolate from the laboratory to actual tax compliance decisions. The theoretical tax compliance literature originally focused on the behavior of the taxpayer, as in Allingham and Sandmo [1]. That is, individuals were modeled as expected utility maximizers with exogenously given audit probabilities. More recent contributions to the theoretical literature, Reinganum and Wilde [12; 13], and Graetz, Reinganum, and Wilde [9] for example, have

The aim of this paper is to study the effects of factors broadly captured under the rubric of parental social and cultural capital on child health. The setting was 11 disadvantaged communities in Victoria, Australia during the conduct and evaluation of Best Start, an early childhood initiative of the Victorian State Government. Questionnaires were sent to parents of 3-year-old children in 2004 and 2006. The principal dependent variable was parental global rating of their child's health. Social capital variables focussed, for example, on community support for parent's child rearing practices. Cultural capital variables focussed, for example, on parent's reading to their child. Socio-economic status and other potential confounding variables were also measured. Stepwise multivariable logistic regression was used. There were consistent independent effects for the cultural capital variables-'Age started reading to the child' and 'Confident being a good parent', and only one of a number of social capital variables-'Community support for childrearing' as well as for some other variables particularly that 'Child had a chronic health/medical condition'. Dichotomizing parent's global ratings of their child's health differently had some effects on results. Cultural capital and, to a lesser extent, social capital variables were associated with parent's rating of the child's health. It is now timely to conduct and evaluate programs aimed at improving parents' cultural capital. Better measures or inventories of parent's cultural capital will be essential for this.

Tax knowledge and attitudes towards taxation; A report on a quasi-experiment

Tax evasion and tax avoidance are among the most addressed topics in economic literature in recent years, as one of the most discussed issues in different countries. The research’s primary purpose is to present Albanian residents’ and taxpayers’ perceptions regarding tax evasion, tax avoidance, and tax compliance. The leading indicators used in this report, the attitude towards tax evasion and tax avoidance, rely on individual taxpayers’ perceptions and not on factual evidence such as the amount of income hidden from the tax authorities. Several studies have been done in different countries regarding the population’s perception regarding factors affecting evasion. In this paper, we investigated the following logical sequence: in the beginning, we provided an overview of the fiscal system and legislation, informal economy, and fiscal evasion in Albania. This analysis data was taken from reports from national and international organizations. After this, we analyzed data obtained from a survey issued to 387 taxpayer individuals in Albania. Our objective was to identify, using empirical analysis, factors that influence an individual’s ethical perception of tax avoidance and evasion. The statistical analyses we carried out in the paper were factor analyses and ordinal logistic linear regression analyses using the JMP statistical software. Based on the empirical research, we concluded that government policies positively correlate with taxpayers’ behavior regarding tax compliance. Among other determinants influencing tax evasion, we have evaluated that higher tax rates are an essential element. The results of the research can be helpful for governments and other policymakers’ institutions.

This study examines the interaction between tax compliance and tax fraud, focusing on fraud detection strategies implemented in several European Union (EU) Member States. The research highlights the significant variability in the effectiveness of anti-avoidance policies at the national level, correcting the previous confusion between avoidance and tax fraud policies. Using a quantitative approach, we develop a composite indicator based on various tax compliance metrics, which reveals significant differences in the effectiveness of tax policies across countries. This study focuses on the efficiency of judicial mechanisms in detecting, investigating, and prosecuting cases of formally documented tax fraud, drawing on data provided by the European Public Prosecutor’s Office (EPPO). Factor and cluster analysis identifies key components and groups countries according to their tax compliance characteristics. The results suggest a direct relationship between the adoption of technological solutions, specifically in tax compliance systems, and efficiency gains, indicating that countries with advanced technological infrastructures perform better. This study not only provides a detailed assessment of the current tax compliance situation in the EU but also offers valuable conclusions for the design of more effective policies specifically aimed at combating tax fraud and tailored to the socio-economic and technological realities of each Member State.

In an economically globalized world, new and hitherto hardly satisfactory mastered governance tasks arise, in particular for the taxation of companies and capital. The example of Greece, Italy, and Spain shows what kind of problems for public finance may occur when a significant proportion of economic activity takes place in the shadows, i.e., without paying duties and taxes. This will not only undermine tax morale in general, but also complicates the provision of public goods as, e.g., roads and bridges, or increases national debt. As the sovereign debt crisis in the euro zone demonstrated, a large shadow economy can have significant negative economic consequences for any member state in a currency union. The shadow economy and tax evasion are at least partially caused by misguided tax policies, as well as by other weaknesses of local and federal governance. Without a deeper understanding of the shadow economy and tax evasion, as well as their relation to tax policy and state governance, an effective and efficient reduction of these side effects of government policy is nearly impossible. To study determinants and consequences of the shadow economy and tax evasion, the biannualMunster shadoweconomyconferences have been established in 2009.The conferences are dedicated to the empirical, experimental, agent-based and theoretical analysis of all topics surrounding the shadoweconomy, tax evasion and tax compliance. The scientific disciplines involved cover economics, econophysics, and psychology, to name only a few. The participants come from a large number of countries, from South Korea to the United States and from Russia to South Africa.

Public dislike of taxes led to tax revolt and tax reform. Despite the connection between tax attitudes and tax policy, relatively little is known about public attitudes toward taxes over time, and how public opinion either shapes or is shaped by changes in tax policy. We examine the link between opinion and changes in tax policy in Florida, where the public’s view of sales and property taxes was surveyed consistently from 1979-1997, a time when both taxes changed significantly. This combination of tax reform and survey data allows us to observe the pattern of public opinion before, during, and after changes in tax policy, and to draw inferences about whether public opinion leads or lags state action, while examining common explanations for individual differences in opinion. Among other things, our results indicate that the portrait of an anti-tax populace is overdrawn and that the pattern of opinion differs for each tax.