Threats in Latin American and Caribbean countries: How do inequality and the asymmetries of rules affect tax morale?
AbstractLatin America is well known as the most inequitable region. As it is recognized, inequality and corruption perception weaken the way that political institutions works and the democratic system. Focusing on Latin American and Caribbean countries, we analyze what are the elements that shape tax morale. In particular, we analyze how the context influences on ethic decisions such as the predisposition to pay taxes. Our data source is the survey carried out in 2005 by Latinobarometro. In particular, our objective is to analyze how country performance is determining tax morale. To do so, we estimated four probit models including Gini index, Transparency International Corruption Perception Index and Gross Domestic Product per capita (GDPpc). As expected we found that some socio-demographic variables play a relevant role. Interestingly, we also found that, in this attitude, LAC countries do not register a gender bias. However, those are not our main contributions to the literature on the field. The most important results are linked with: 1) the level matters, GDPpc increases the probability that people have tax morale, 2) moreover, income distribution also influence on tax morale but in opposite direction and 3) corruption perception also reduces tax morale. Those results show that the quality of institutions matters and therefore, the way that democracy works play a relevant role.
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Bibliographic InfoPaper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 143.
Length: 14 pages
Date of creation: 2009
Date of revision:
Tax morale; corruption; inequality; democracy; microeconomic behaviour.;
Other versions of this item:
- Mariana Gerstenblüth & Natalia Melgar & Juan Pablo Pagano & Máximo Rossi, 2008. "Threats in Latin American and Caribbean countries: how do inequality and the asymmetries of rules affect tax morale?," Documentos de Trabajo (working papers) 1408, Department of Economics - dECON.
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-31 (All new papers)
- NEP-LAM-2009-10-31 (Central & South America)
- NEP-LTV-2009-10-31 (Unemployment, Inequality & Poverty)
- NEP-PBE-2009-10-31 (Public Economics)
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