Level Of Tax Morale Research Articles

Could Religiosity and Religion Influence the Tax Morale of Individuals? An Empirical Analysis Based on Variable Selection Methods

When people who adhere to tax morality act in a situation where there is no sense of risk, no acceptance of the government, or no environment conducive to tax compliance, it is easier to see how they are motivated to do so. Tax morality is also known as the ethics of compliance. It is the independent cause that motivates a positive tax behaviour. Employees’ religious beliefs may impact their ideas and actions in organizational life, just as individuals’ attitudes, values, emotions, abilities, and behaviours influence their thoughts and actions at work. Religion can positively influence a worker’s loyalty, morale, and communication. In this context, the research seeks to determine whether religiosity and religion may have an effect on tax morale, examining whether an individual’s religiosity reduces tax evasion and increases the degree of tax morale. Using machine learning variable selection techniques appropriate for categorical variables, we have used the dataset of the Joint EVS/WVS 2017-2020 (European Value Survey/World Value Survey), allowing for comparisons of tax morality in more than 79 nations globally (chi-squared and mutual information). The empirical findings showed that the most important aspects of religiosity, such as religious denomination, belief in God, and the significance of God, along with the degree of trust placed in other religions and churches, have a considerable positive impact on the level of tax morale. Another significant conclusion relates to how much people feel the government is responsible, how much they care about their nation, and how satisfied they are with the political system—findings that have been shown to boost employee morale. The following are a person’s primary traits that indicate their financial morale: an adult above the age of 25, a full-time worker or retired person, married, and living alone. Therefore, employees that are morally upright, trustworthy, diligent, and committed to the workplace values of justice and decency raise morale generally and improve an organisation’s success. A business may enhance its reputation and help to secure its long-term success by establishing behavioural policies.

The Evolution of Tax Morale in Turkey

The aim of the study is to examine the evolution of tax morale in Turkey within a 22-year period. The data obtained from the World Values Survey were evaluated in the Stata 13 statistics package program. As a result of the analyses through ordered probit models, it was observed that the level of tax morale had changed over the course of time. Tax morale level was lower between 2007 and 2012 than in the year 1990. In addition, the research findings indicate that levels of confidence in bureaucracy and financial satisfaction levels have an effect on tax morale. According to estimated results, confidence in the government, as well as the importance of religion and national pride, all have a significantly positive effect on tax morale. The results of the study show that governments and policy makers must pay more attention to the tax morale issue in order to increase tax revenues along with tax compliance.

An Institutional Theory of Tax Non- Compliance in Bulgaria: a Tax Morale Approach

To explain tax non-compliance, the dominant approach has been to view noncompliance as a rational economic decision taken when the benefits outweigh the costs. However, many remain compliant even when non-compliance is the rational economic decision. The outcome has been the emergence of a new tax morale approach. Grounded in institutional theory, this asserts that formal institutional failings lead to an asymmetry between the laws and regulations of a society’s formal institutions and the beliefs of the population that constitute its informal institutions. The greater is this asymmetry (measured by the level of tax morale), the greater is the prevalence of tax non-compliance. Until now, studies have analysed the tax morale of citizens. This paper evaluates the tax morale of entrepreneurs and identifies the formal institutional failings that lead to lower tax morale among entrepreneurs. Reporting 456 face-to-face interviews with a nationally representative sample of entrepreneurs in Bulgaria, it is revealed not only that the tax morale of entrepreneurs varies by sector and firm size, but also that the formal institutional failings significantly associated with low tax morale include a perceived lack of tax fairness, corruption and political instability. The implications for theory and policy are then discussed.

Social norms and economic growth in a model with labor and capital income tax evasion

Empirical evidence suggests that low-income countries are characterized by high levels of labor and capital income tax evasion while the opposite is true for high-income countries. This paper proposes a model to study the relationship between economic growth and both types of income tax evasion. We show that the existence of a social norm towards tax compliance generates a complementarity between capital and labor income tax evasion which explains the decline of both the share of evaders in the population and the amount of tax evasion when countries accumulate capital. The model predicts that the level of tax morale is positively correlated with both types of income tax evasion and the level of income per capita, consistent with recent empirical evidence. Finally, a higher tax rate increases the share of evaders in the population and aggregate tax evasion.

Explaining participation in undeclared work in France: lessons for policy evaluation

PurposeFrance is a model of best practice in the European Union as regards policy to combat undeclared work. The purpose of this paper is to take the country as a case study to evaluate the competing explanations of why people engage in undeclared work which underpin such policy, namely, the dominant rational-economic-actor approach and the more recent social-actor approach.Design/methodology/approachTo evaluate these approaches, the results of 1,027 interviews undertaken in 2013 with a representative sample of the French population are analysed.FindingsThe finding is that higher perceived penalties and risks of detection have no significant impact on the likelihood of conducting undeclared work in France. In contrast, the level of tax morale has a significant impact on engagement in the activity: the higher the tax morale, the lower is the likelihood of participation in the undeclared economy. Higher penalties and risks of detection only decrease the likelihood of participation in undeclared work amongst the small minority of the French population with very low tax morale.Practical implicationsCurrent policy in France to counter undeclared work is informed principally by the rational-economic-actor approach based on a highly developed infrastructure for detection and significant penalties alongside incentives to declare small-scale own-account work. The present analysis suggests that this approach needs to be supplemented with measures to improve citizens’ commitment to compliance by enhancing tax morale.Originality/valueThis case study of a country with a well-developed policy framework to combat undeclared work provides evidence to support the social-actor approach for informing policy change.

Tackling the undeclared economy in the European Union: an evaluation of the tax morale approach

AbstractTo evaluate a new approach towards tackling the undeclared economy, which views participants as social actors rather than rational economic actors, this article reports evidence from 27,563 face‐to‐face interviews conducted across the European Union during 2013. Multilevel logistic regression analysis reveals a strong association between participation in undeclared work and the level of tax morale. Finding that higher tax morale (and thus a lower propensity to engage in undeclared work) is strongly correlated with greater levels of state intervention but also with individual‐level characteristics such as gender, age, education and employment status, the article concludes not only by confirming a political economy approach and refuting modernization and neo‐liberal explanations and remedies, but also by revealing for the first time the importance of solutions not so far considered, including improving educational attainment, older citizens mentoring for younger people and improving women's participation in the labour force.

Evaluation of Digital Shadow Economy Prevention Measures

Abstract Although during the past few years the scopes of shadow economy in Lithuania have slightly decreased, different forms of this phenomenon, in particular digital shadow activities, still generate a significant part of the overall value added. As no constant estimations of the scope of digital shadow economy have been made in Lithuania, alleviation of this problem is based on consequence fighting rather than reason elimination. Digital shadow economy poses a significant challenge for law enforcement agencies concerning its investigation and prevention. Hence, it is purposeful to research both theoretical and practical aspects of digital shadow economy prevention in order to identify the measures that could be used for the efficient reduction of the scope of this phenomenon. The aim of this research is to identify the measures of digital shadow economy prevention and compare the attitudes of governmental institutions and consumers towards the efficiency of these measures. The results of the empirical research showed that both consumers and experts agree that the level of tax morale has to be raised not only by using the measures of self-education but also by introducing long-term educational programmes; second, public authorities should ensure business friendly environment, actively implement the principles of justice and officially acknowledge and announce the concept of digital shadow economy; finally, for more efficient detection of the cases of digital shadow activities, it is necessary to reinforce current labour resources that should be specially trained to be able to disclose revenue hiding and tax evasion schemes, employed in e-trade.

Beyond a Deterrence Approach towards the Undeclared Economy: Some Lessons from Bulgaria

Until now, the undeclared economy has been tackled in Balkan countries by increasing the penalties and risk of detection so as to deter participation. Recently however, calls have been made for a new more indirect approach that improves tax morale in order to foster a culture of commitment to compliance. The aim of this paper is to evaluate these contrasting policy approaches. Reporting evidence from 1018 face-to-face interviews conducted in Bulgaria during 2013, logistic regression analysis reveals no association between participation in undeclared work and the perceived level of penalties and risk of detection, but a strong association between participation in undeclared work and the level of tax morale. The paper concludes by discussing the theoretical and policy implications of the findings.

Shared state taxes and tax policy of local self-governments in connection with tax morale

Based on our assumption, tax morale significantly depends on a country’s legal, historical, social and cultural background and circumstances. In the first part of the paper, we discuss the legal dimension of the tax morale – including the interconnection of law, ethics and moral. Furthermore, we analyze the facts breaching tax liabilities under the scope of the criminal law and the actions violating the tax morale but not qualified as infringement of the criminal law. In the second part of the paper, we provide empirical evidence on which factors (e.g. personal characteristics, commitment for paying local taxes, knowledge about the distribution of paid taxes between central and local authorities, etc.) determine significantly the individual level of tax morale. The paper discusses these complex connections either from the viewpoint of law or economics in order to find out whether it is possible to develop the tax morale of individuals, or can the legislator adequately rule the different forms of tax evasion.

Is there a cultural component in tax morale? Evidence from immigrants in Europe

In this paper we examine the existence of a cultural component in individual tax morale. To identify the effect of culture we use immigrant data drawn from the European Social Survey. We find that culture is a significant determinant of tax morale: the level of tax morale in the country of immigrant origin influences individual tax morale in the destination country. The result is robust to the inclusion of a wide set of individual and aggregate controls and persists across different population segments.

Tax Morale After the Reunification of Germany: Results from a Quasi-Natural Experiment

This paper provides a comparison of tax morale between inhabitants of East and West Germany in its post-reunification period, using three World Values Survey/European Values Survey waves between 1990 and 1999. German reunification is particularly interesting for the analysis of tax morale as it is close to a natural experiment. Many factors can be controlled because they are similar, as, e.g., a common language, similar education systems and a shared cultural and political history prior to the separation after the Second World War. As a consequence, an East-West comparison has a methodological advantage compared to cross-country studies. Our findings show higher tax morale in East than in West Germany. However, in only 9 years after reunification, tax morale values strongly converged, especially due to a strong change in the level of tax morale in the East. We suggest that this convergence in tax morale between East and West Germany, despite efforts of the federal government to increase deterrence, indicates that tax morale is more strongly driven by other factors than deterrence.

Tax Morale and Fiscal Autonomy: Evidence from Germany

Why people pay their taxes voluntarily is a key puzzle in the public finance literature. Some suggest that factors such as the level of tax morale, defined as the intrinsic motivation to pay taxes, affects compliance behaviour. While there have been numerous studies that have explored tax compliance or tax evasion, very few have explored the concept of tax morale in any detail. the basic intention of the empirical part is to analyse how fiscal autonomy affects tax morale in Germany. This also allows fill a gap in the tax compliance literature, which has rarely analysed the impact of fiscal autonomy on tax compliance or tax morale. Strong evidence has been found that a higher fiscal autonomy leads to a higher tax morale, controlling in a multivariate analysis for additional factors.