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Working Paper 333 - Corruption and Tax Morale in Africa

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Abstract

This paper analyzes the effect of the quality of governance (proxied by perceived corruption) on attitudes toward paying taxes. Using the Afrobarometer surveys from 36 African countries, over the period 2011-2015, we find that a perception of low corruption at different levels of the executive branch (president's office, government officials, or tax authorities) has a significant and positive impact on tax morale. To account for possible reverse causality between a citizen's perception of governance quality and attitude toward tax payment, we also propose an instrumental variables (IV) approach, using the ethnicity of the country's leader as an instrument for perceived level of corruption, the assumption being that individuals from the same ethnic group tend to have a favorable perception of concurrent governance. The IV results confirm that an individual's positive perception of governance has a positive impact on one's willingness to pay taxes.

Suggested Citation

  • Amadou Boly & Maty Konte & Abebe Shimeles, 2020. "Working Paper 333 - Corruption and Tax Morale in Africa," Working Paper Series 2459, African Development Bank.
    • Handle: RePEc:adb:adbwps:2459
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    More about this item

    Keywords

    corruption; taxation; governance; Africa JEL Classification: D73; H71; O55;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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