Does Institutional Trust Increase Willingness to Pay More Taxes to Support the Welfare State?

Citizens' Trust in Government and Their Greater Willingness to Pay Taxes in Tanzania: A Case Study of Mtwara, Lindi, and Dar es Salaam Regions

“…They argued that more trusting individuals are more WTP taxes in order to support improvement in healthcare. Similarly, Habibov et al (2018) found a positive effect of institutional trust on the WTP more taxes to support the welfare state irrespective of any approach used.…”

“…This means trust is not just something that happens to governments but something that governments can influence through their actions and policies. From a citizen's view, trust gives policy leaders and public institutions a green light in the implementation of redistribution policies (Habibov et al, 2018). Therefore, the high level of trust in government can be explained by different expectations that citizens have for government service provisions and performance.…”

“…An increase of social trust is associated with a greater WTP more taxes to improve public health care. Moreover, Habibov, Cheung, and Auchynnikava (2018) evaluated the effect of institutional trust on the WTP more taxes to support the welfare state. They found a positive effect of institutional trust on the WTP more taxes to support the welfare state irrespective of the empirical approach used.…”

Who wants to pay more taxes to improve public health care?

“…Second, social trust is a strong precursor of solidarity and social cohesion and commonly translates into a higher degree of support for public programs . Indeed, Habibov and colleagues used the instrumental variable approach to address possible reverse causality between social trust and the WTP to improve public health care and reported that a one level increase in the level of social trust is associated with an increase in the propensity of being willing to pay more taxes to improve public health care in post‐communist countries by approximately 20% points. This discussion leads to the second hypothesis: ( H2) Social trust strengthens the WTP to improve public health care .…”

“…As such, a recent study of post‐communist countries has found that individuals with higher levels of institutional trust are more willing to pay more taxes for public welfare programs . Furthermore, the recent study of Habibov et al used instrumental variable approach to highlight causality and reported that a one‐unit increase in institutional trust in post‐communist countries caused a 16% point increase in the willingness to pay more taxes to support public health care. We then hypothesize: (H3) Institutional trust strengthens the WTP to improve public health care .…”