Abstract
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.
Highlights
Tax evasion is an important issue in almost all countries
Of the respondents 3.9 percent are part-time employed, 7.7 percent are self-employed, 19 percent are retired, 17 percent are housewives, 7 percent are students, and 4.6 percent are unemployed. When it comes to the variable of tax morale, 63 percent of the individuals have the highest tax morale level
Among the social capital variables, national pride has the highest figure with 92 percent of respondents proud of their national identity
Summary
Tax evasion is an important issue in almost all countries. While some taxpayers seek the ways of evasion, the others are not eager to evade. To large extent, to do with the physiological background of these behaviours. Tax morale is concerned with why people do not evade. There has been much in common between tax morale and tax compliance. Tax compliance is an observable action; that is most people pay their taxes. Tax compliance is a function of tax ratios and probability of detection, and a function of an individual’s willingness to comply with and to evade. As Torgler (2007) pointed out, level of tax compliance is relatively high when tax morale is high; tax morale is needed for providing on an account of the puzzle of tax compliance
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