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Tax Morale in Australia: What Shapes it and Has it Changed over Time?

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  • Benno Torgler
  • Kristina Murphy

Abstract

Why citizens pay their taxes voluntarily is an important question for tax administrations worldwide. Some believe it is because taxpayers are deterred from tax evasion out of a fear of being caught or penalised. Others, in contrast, suggest that factors such as the level of tax morale one has (i.e., the intrinsic motivation one has to pay their tax) affects compliance behaviour. While there have been numerous empirical studies published that have explored the role of deterrence on tax compliance behaviour, very few studies have explored the concept of tax morale in any detail. This study therefore attempts to rectify this gap in the literature. If tax morale is important in determining compliance behaviour, as several researchers have suggested, then it is also important to understand what might affect one?s level of tax morale. The specific aim of this paper will be to identify factors that shape or have an impact on tax morale. Using data collected from the Australian wave of the 1981 and 1995 World Values Survey, this study will demonstrate that factors such as trust and moral beliefs play an important role in shaping tax morale in Australia. Further, it will be shown that tax morale has increased significantly in Australia since the early 1980s, and that it has done so at a faster rate than many other OECD countries. Possible explanations for this increase will be discussed.

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Bibliographic Info

Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2004-04.

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Date of creation: Jan 2004
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Handle: RePEc:cra:wpaper:2004-04

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Keywords: Tax Morale; Tax Compliance; Tax Evasion; Australia;

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References

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  1. 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.
  2. 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.
  3. 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).
  4. Benno Torgler, 2005. "Tax morale in Latin America," Public Choice, Springer, vol. 122(1), pages 133-157, January.
  5. Torgler, Benno, 2003. "To evade taxes or not to evade: that is the question," The Journal of Socio-Economics, Elsevier, vol. 32(3), pages 283-302, July.
  6. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
  7. Benno Torgler, 2003. "Tax Morale, Rule-Governed Behaviour and Trust," Constitutional Political Economy, Springer, vol. 14(2), pages 119-140, June.
  8. Feld, Lars P & Tyran, Jean-Robert, 2002. "Tax Evasion and Voting: An Experimental Analysis," Kyklos, Wiley Blackwell, vol. 55(2), pages 197-222.
  9. Bruno S. Frey & Lars P. Feld, 2002. "Deterrence and Morale in Taxation: An Empirical Analysis," CESifo Working Paper Series 760, CESifo Group Munich.
  10. Lipford, Jody & McCormick, Robert E. & Tollison, Robert D., 1993. "Preaching matters," Journal of Economic Behavior & Organization, Elsevier, vol. 21(3), pages 235-250, August.
  11. Andreoni, J. & Erard, B. & Feinstein, J., 1996. "Tax Compliance," Working papers 9610r, Wisconsin Madison - Social Systems.
  12. Lewis, Alan, 1979. "An Empirical Assessment of Tax Mentality," Public Finance = Finances publiques, , vol. 34(2), pages 245-57.
  13. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x.
  14. Alm, James & McClelland, Gary H. & Schulze, William D., 1992. "Why do people pay taxes?," Journal of Public Economics, Elsevier, vol. 48(1), pages 21-38, June.
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Cited by:
  1. Benno Torgler & Christoph A. Schaltegger, 2005. "Tax Morale and Fiscal Policy," CREMA Working Paper Series 2005-30, Center for Research in Economics, Management and the Arts (CREMA).
  2. Sandra Sookram & Friedrich G. Schneider & Patrick Kent Watson, 2006. "Characteristics of the household sector of the hidden economy in an emerging economy," Economics working papers 2006-05, Department of Economics, Johannes Kepler University Linz, Austria.
  3. Braithwaite, Valerie & Ahmed, Eliza, 2005. "A threat to tax morale: The case of Australian higher education policy," Journal of Economic Psychology, Elsevier, vol. 26(4), pages 523-540, August.
  4. Liliana Bunescu & Carmen Comaniciu, 2011. "Romanian Taxpayers’ Inclination To Tax Cheating," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 6(1), pages 19-29, April.
  5. Torgler, Benno, 2011. "Tax morale and compliance : review of evidence and case studies for Europe," Policy Research Working Paper Series 5922, The World Bank.
  6. Benno Torgler & Christoph A. Schaltegger, 2006. "Tax Morale: A Survey with a Special Focus on Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(III), pages 395-425, September.

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