Is Tax Morale Homogeneous in Bulgaria?

The article argues that tax morale is an essential component of social capital with a significant impact on tax compliance and tax collection. Against this backdrop, the results of the study are based on a questionnaire survey in Bulgaria, conducted among 1280 employed individuals. They work in enterprises that are representative of the country’s economy in terms of economic activity, size, and geographical location. We design an index to assess the tax morale of the respondents and use it to address a series of questions. What is the tax morale of the Bulgarian population currently? What factors possibly influence it? Are there any differences between various population groups, based on socio-demographic or socio-economic characteristics? The results show that tax morale in Bulgaria is heterogeneous. Such findings lead to certain conclusions about economic policy reforms. By influencing the tax morale of the population, policymakers can improve tax collection. Our estimations show that a relatively large share of the population in Bulgaria has average or low tax morale. We point out that one of the most effective ways to increase tax revenues is through targeted measures to improve the tax morale of specific groups of people with a high inclination to participate in the shadow economy and evade taxes. Using statistical tests and ordinal regression models, this article provides empirical evidence that the profile of these individuals includes low income, living in regional cities, younger age and poor education.