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Is Forgiveness Divine? A Cross-Culture Comparison of Tax Amnesties

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  • Benno Torgler
  • Christoph A. Schaltegger
  • Markus Schaffner

Abstract

Tax compliance literature lacks empirical evidence regarding the effects of a tax amnesty on tax compliance. To measure the long run effects of an amnesty on compliance, experiments in Switzerland and Costa Rica were conducted. The results suggest that tax compliance raises significantly when people get the opportunity to vote for or against a tax amnesty, independently from whether a tax amnesty is rejected or not. The strongest effect can be achieved when voting is coupled with pre-voting discussion. Furthermore, the anticipation of further tax amnesties reduces positive effects on tax compliance. All these findings are robust across the different cultures. Interestingly, our results indicate that tax compliance is significantly higher in Costa Rica than to Switzerland.

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Bibliographic Info

Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

Volume (Year): 139 (2003)
Issue (Month): III (September)
Pages: 375-396

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Handle: RePEc:ses:arsjes:2003-iii-7

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Related research

Keywords: tax amnesty; tax compliance; voting behaviour; experiments; culture;

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References

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  1. Benno Torgler, 2003. "Tax Morale in Latin America," Working papers 2003/03, Faculty of Business and Economics - University of Basel.
  2. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2008. "Societal Institutions and Tax Effort in Developing Countries," CEMA Working Papers 582, China Economics and Management Academy, Central University of Finance and Economics.
  3. Bruno S. Frey & Lars P. Feld, 2002. "Deterrence and Morale in Taxation: An Empirical Analysis," CESifo Working Paper Series 760, CESifo Group Munich.
  4. Fisher, Ronald C. & Goddeeris, John H. & Young, James C., 1989. "Participation in Tax Amnesties: The Individual Income Tax," National Tax Journal, National Tax Association, vol. 42(1), pages 15-27, March.
  5. Friedland, Nehemiah & Maital, Shlomo & Rutenberg, Aryeh, 1978. "A simulation study of income tax evasion," Journal of Public Economics, Elsevier, vol. 10(1), pages 107-116, August.
  6. Alm, James & Cronshaw, Mark B & McKee, Michael, 1993. "Tax Compliance with Endogenous Audit Selection Rules," Kyklos, Wiley Blackwell, vol. 46(1), pages 27-45.
  7. Lars P. Feld & Bruno S. Frey, . "Trust Breeds Trust: How Taxpayers are Treated," IEW - Working Papers 098, Institute for Empirical Research in Economics - University of Zurich.
  8. Dubin, Jeffrey A & Graetz, Michael J & Wilde, Louis L, 1992. "State Income Tax Amnesties: Causes," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 1057-70, August.
  9. Alm, James & McClelland, Gary H & Schulze, William D, 1999. "Changing the Social Norm of Tax Compliance by Voting," Kyklos, Wiley Blackwell, vol. 52(2), pages 141-71.
  10. Torgler, Benno, 2002. " Speaking to Theorists and Searching for Facts: Tax Morale and Tax Compliance in Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 657-83, December.
  11. Spicer, Michael W. & Thomas, J. Everett, 1982. "Audit probabilities and the tax evasion decision: An experimental approach," Journal of Economic Psychology, Elsevier, vol. 2(3), pages 241-245, September.
  12. James Alm, 1998. "Tax Policy Analysis: The Introduction of a Russian Tax Amnesty," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9806, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  13. Alm, James & Beck, William, 1993. "Tax Amnesties and Compliance in the Long Run: A Time Series Analysis," National Tax Journal, National Tax Association, vol. 46(1), pages 53-60, March.
  14. Benno Torgler, 2003. "Cross Culture Comparision of Tax Morale and Tax Compliance," Working papers 2003/06, Faculty of Business and Economics - University of Basel.
  15. Alm, James & Sanchez, Isabel & de Juan, Ana, 1995. "Economic and Noneconomic Factors in Tax Compliance," Kyklos, Wiley Blackwell, vol. 48(1), pages 3-18.
  16. Alm, James & McKee, Michael J. & Beck, William, 1990. "Amazing Grace: Tax Amnesties and Compliance," National Tax Journal, National Tax Association, vol. 43(1), pages 23-37, March.
  17. Bohnet, Iris & Frey, Bruno S, 1994. "Direct-Democratic Rules: The Role of Discussion," Kyklos, Wiley Blackwell, vol. 47(3), pages 341-54.
  18. Ronald G. Cummings & Jorge Martinez-Vazquez & Michael McKee, 2001. "Cross Cultural Comparisions of Tax Compliance Behavior," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0103, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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Citations

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Cited by:
  1. Frey, Bruno S. & Torgler, Benno, 2007. "Tax morale and conditional cooperation," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 136-159, March.
  2. Lars P. Feld & Bruno S. Frey, 2006. "Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale," CREMA Working Paper Series 2006-13, Center for Research in Economics, Management and the Arts (CREMA).
  3. Bruno S. Frey & Benno Torgler, 2004. "Taxation and Conditional Taxation," Working Papers 2004/7, Institut d'Economia de Barcelona (IEB).
  4. Benno Torgler & Friedrich Schneider & Christoph A. Schaltegger, 2007. "With or Against the People? The Impact of a Bottom-Up Approach on Tax Morale and the Shadow Economy," CREMA Working Paper Series 2007-04, Center for Research in Economics, Management and the Arts (CREMA).
  5. Benno Torgler & Friedrich Schneider & Christoph A. Schaltegger, 2008. "Local Autonomy, Tax Morale and the Shadow Economy," CREMA Working Paper Series 2008-24, Center for Research in Economics, Management and the Arts (CREMA).
  6. Hari Luitel & Mehmet Serkan Tosun, 2010. "An Examination of the Relation between State Fiscal Health and Amnesty Enactment," Working Papers 10-009, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics.
  7. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale and Governance Quality," CREMA Working Paper Series 2007-17, Center for Research in Economics, Management and the Arts (CREMA).
  8. Benno Torgler, 2003. "Beyond Punishment: a tax compliance experiment with taxpayers in Costa Rica," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 18(1), pages 27-56, June.
  9. Lars P. Feld & Bruno S. Frey, 2004. "Illegal, Immoral, Fattening or What?: How Deterrence and Responsive Regulation Shape Tax Morale," Marburg Working Papers on Economics 200426, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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