Is tax morale culturally driven?

Abstract

Citizens' tax compliance should not only respond to the quality of formal institutions, but might also be culturally driven. We contribute to this literature by investigating whether tax morale, an individual's intrinsic non-pecuniary motivation to comply with taxes, is associated with the cultural values (following Hofstede's typology) held by this individual. The analysis exploits four waves of the European Values Survey (1981–2010) across 48 countries. The cultural dimensions are constructed through a polychoric principal component analysis on a set of relevant survey items consistent with Hofstede's definitions. Ordered logit estimations suggest that although values of individualism and femininity are associated with higher individual's tax morale, power distance and uncertainty avoidance are associated with lower tax morale. These results remain consistent as we increase the level of granularity of our investigation through within-region analyses and, subsequently, within-cohort analyses. We argue that these results inevitably enrich the emerging debate about cultural values and citizens' compliance with formal institutions. They also indicate that societal culture as well as individual values should be considered when designing policies aiming to improve tax compliance.

Moderating influence of religiosity on the causality between taxpaying attitudes and tax compliance behaviour of entrepreneurial firms in Nigeria

“…In other words, a positive change in people's religious ideology and religious experience leads to a positive change in the intention to adopt Islamic banking. With regard to culture, a number of studies have established that tax compliance behaviour is culturally driven (Torgler and Schneider, 2004;Barone and Mocetti, 2011;Andriani et al, 2020), but few studies have explored the tax-religious nexus (Torgler, 2006;Mohdali and Pope, 2010). Religion is part of human life, and since tax payment is a human activity, there is a likelihood of tax compliance being influenced by religiosity.…”

“…Consequently, policymakers are looking beyond economic factors to improve tax compliance behaviour, while researchers complement economic factors with sociological and psychological factors to develop a more comprehensive tax compliance model (Chau and Leung, 2009; Batrancea et al , 2012; Jayawardane, 2015). A comprehensive tax compliance model looks at the issue of tax compliance more broadly from the perspective of tax morality, a phenomenon described as an individual’s intrinsic motivation to pay taxes (Torgler and Schneider, 2007; Andriani et al , 2020). Tax morale has long been neglected for decades in the tax literature (Andreoni et al , 1998) but suddenly became a topical issue in most empirical studies examining tax compliance in recent times (Lago-Peñas and Lago-Peñas, 2010).…”

“…In addition, classical economists identified audit probability, tax rates and penalties as reasons why people and corporate entities evade taxes. However, emerging pieces of evidence refute this perspective, especially where some studies establish that deterrence and punitive measures are insufficient to improve taxpayers’ compliance (Devos, 2013; Andriani et al , 2020). Persuasive measures that emphasise the use of motivational factors have functionally proven to improve tax compliance behaviour among taxpayers (Devos, 2014).…”

Introduction to the special issue on institutions and culture in economic contexts

“…In this respect, this special issue devotes particular attention to the role of cultural aspects relative to economic and institutional outcomes (Mickiewicz and Kaasa, 2021;Moellman and Tarabar, 2021), individuals and social attitudes towards rent-seeking behaviours, corruption, tax evasion, and institutional trust, among others (Amini et al, 2021;Andriani et al, 2021;Kaasa and Andriani, 2021), and to the interplay between specific cultural traits and the evolution of institutional frameworks such as family systems and state formation (Benati and Guerriero, 2021;Gutmann and Voigt, 2021). Part of the special issue has also been devoted to commemorating Geert Hofstede, pioneer in the study of culture and institutional aspects (Sent and Kroese, 2021) as well as the review of Joel Mokyr's book 'A Culture of Growth' (Hodgson, 2021) and subsequent response of Joel Mokyr to this book review (Mokyr, 2021).…”

“…The paper by Andriani et al (2021) look at the role that specific Hofstede cultural traits (individualism, power distance, uncertainty avoidance and femininity) have on individual's attitude towards tax evasion. To do so, they exploit data from European Value Survey (available waves in the 1981-2010 time span across 164,997 respondents within 48 countries).…”