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Local Autonomy, Tax Morale and the Shadow Economy

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Author Info

  • Benno Torgler
  • Friedrich Schneider
  • Christoph A. Schaltegger

Abstract

Policymakers often propose strict enforcement strategies to fight the shadow economy and to increase tax morale. However, there is also a bottom-up approach such as, for example, decentralizing the political power to those who are close to the problems. Thus, this paper analyses the relationship between local autonomy and tax morale or the size of the shadow economy. We use data on tax morale at the individual level and macro data of the size of the shadow economy to systematically analyse the relevance of local autonomy and compliance in Switzerland, a country where the degree of federalism varies across different cantons. The findings suggest that there is a positive (negative) relationship between local autonomy and tax morale (size of the shadow economy).

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File URL: http://external-apps.qut.edu.au/business/documents/discussionPapers/2008/243Togler.pdf
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Bibliographic Info

Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 243.

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Length: 40 pages
Date of creation: 27 Jan 2009
Date of revision:
Handle: RePEc:qut:dpaper:243

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Web page: http://www.bus.qut.edu.au/faculty/economics/
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Keywords: Tax Morale; Shadow Economy; Tax Compliance; Tax Evasion; Local Autonomy; Federalism; Institution;

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References

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Citations

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Cited by:
  1. Andreas Bühn & Christian Lessmann & Gunther Markwardt, 2011. "Decentralization and the Shadow Economy: Oates Meets Allingham-Sandmo," CESifo Working Paper Series 3551, CESifo Group Munich.
  2. Guglielmo Barone & Sauro Mocetti, 2011. "Tax morale and public spending inefficiency," International Tax and Public Finance, Springer, vol. 18(6), pages 724-749, December.
  3. Garcia Alvarez-Coque, Jose-Maria & Lopez-Garcia Usach, T. & Sanchez Garcia, M., 2012. "Territory and innovation behaviour in agri-food firms: does rurality matter?," 126th Seminar, June 27-29, 2012, Capri, Italy 126030, European Association of Agricultural Economists.
  4. Friedrich Schneider & Désirée Teobaldelli, 2012. "Beyond the Veil of Ignorance: The Influence of Direct Democracy on the Shadow Economy," CESifo Working Paper Series 3749, CESifo Group Munich.
  5. Roberto Dell'Anno & Désirée Teobaldelli, 2012. "Keeping both Corruption and the Shadow Economy in Check: The Role of Decentralization," Working Papers 1213, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2012.

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