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Quality of Government Services and the Civic Duty to Pay Taxes in the Czech and Slovak Republics, and other Transition Countries

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  • Jan Hanousek

    (Center for Economic Research and Graduate Education)

  • Filip Palda

    (École nationale d'administration publique in Montreal)

Abstract

A 2002 survey of 1089 Czechs and 501 Slovaks, as well as a more limited survey of Hungary, and Poland, indicates that an individual may evade taxes in part if he believes he is receiving substandard government services. We suggest that an individual’s evaluation of the quality of government services is not influenced by his need to justify his evasion. Self-reported measures of morality show no correlation with evasion. This suggests that perceptions of government services are not shaped by an individual’s need to justify his evasion. This gives weight to our finding that the perceived quality of government services influences evasion. The less quality of government services an individual reports, the more likely he is to evade taxes. A 20% increase in the perception that government services are of quality would lead to a 5% decrease in the number of frequent tax evaders and a 12% increase in the number who never evade. Governments in transition countries who suffer from weak tax collection apparatus may wish to transmit clear information on the quality of their services in order to cut down on evasion.

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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0209007.

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Length: 39 pages
Date of creation: 30 Sep 2002
Date of revision:
Handle: RePEc:wpa:wuwppe:0209007

Note: Type of Document - PDF; prepared on IBM-PC; pages: 39
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Web page: http://128.118.178.162

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Keywords: Tax evasion; quality of government services; transition; Czech Republic; Slovak Republic; Hungary; Poland;

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References

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  1. Matsusaka, John G & Palda, Filip, 1993. " The Downsian Voter Meets the Ecological Fallacy," Public Choice, Springer, vol. 77(4), pages 855-78, December.
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  4. Filip Palda, 1998. "Evasive Ability and the Efficiency Cost of the Underground Economy," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1118-1138, November.
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Cited by:
  1. Benedek, Dora & Lelkes, Orsolya, 2009. "The distributional implications of income underreporting in Hungary," MPRA Paper 17287, University Library of Munich, Germany.
  2. Eric M. Uslaner, 2007. "Tax Evasion, Corruption, and the Social Contract in Transition," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0725, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.
  4. Jason M. DeBacker & Bradley T. Heim & Anh Tran, 2012. "Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States," NBER Working Papers 17770, National Bureau of Economic Research, Inc.
  5. Manos Matsaganis & Maria Flevotomou, 2010. "Distributional Implications of Tax Evasion in Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 31, Hellenic Observatory, LSE.
  6. Scott Gehlbach, 2003. "Taxability and Government Support of Business Activity: Testing Theories of Social-Contract Failure," Working Papers w0028, Center for Economic and Financial Research (CEFIR).
  7. Mutascu, Mihai, 2012. "Influence of clime conditions on tax revenues," MPRA Paper 40324, University Library of Munich, Germany.
  8. Klarita Gërxhani, 2007. "“Did You Pay Your Taxes?” How (Not) to Conduct Tax Evasion Surveys in Transition Countries," Social Indicators Research, Springer, vol. 80(3), pages 555-581, February.
  9. Manos Matsaganis & Maria Flevotomou, 2010. "Distributional implications of tax evasion in Greece," LSE Research Online Documents on Economics 26074, London School of Economics and Political Science, LSE Library.
  10. Eric M. Uslaner, 2011. "Corruption and Inequality," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 9(2), pages 20-24, 07.
  11. Maurizio Bovi & Roy Cerqueti, 2014. "A quantitative view on policymakers’ goal, institutions and tax evasion," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1493-1510, May.
  12. Kenyon, Thomas, 2007. "A framework for thinking about enterprise formalization policies in developing countries," Policy Research Working Paper Series 4235, The World Bank.
  13. Lackó, Mária, 2006. "Az adóráták és a korrupció hatásai a munkapiacra. Keresztmetszeti összehasonlító elemzés az OECD-országokon
    [The effects of tax rates and corruption on the labour market. A cross-section
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 961-985.
  14. Matsaganis, Manos & Benedek, Dóra & Flevotomou, Maria & Lelkes, Orsolya & Mantovani, Daniela & Nienadowska, Sylwia, 2010. "Distributional implications of income tax evasion in Greece, Hungary and Italy," MPRA Paper 21465, University Library of Munich, Germany.
  15. Jaanika Meriküll & Tairi Rõõm & Karsten Staehr, 2013. "Perceptions of unreported economic activities in Baltic Firms. Individualistic and non-individualistic motives," Bank of Estonia Working Papers wp2012-8, Bank of Estonia, revised 04 Feb 2013.
  16. Torgler, Benno, 2011. "Tax morale, eastern Europe and European enlargement," Policy Research Working Paper Series 5911, The World Bank.
  17. Torgler, Benno, 2011. "Tax morale and compliance : review of evidence and case studies for Europe," Policy Research Working Paper Series 5922, The World Bank.
  18. Andreas Buehn & Mohammad Reza Farzanegan, 2013. "Impact of education on the shadow economy: Institutions matter," Economics Bulletin, AccessEcon, vol. 33(3), pages 2052-2063.
  19. Joel Slemrod, 2009. "Old George Orwell Got it Backward: Some Thoughts on Behavioral Tax Economics," CESifo Working Paper Series 2777, CESifo Group Munich.

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