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The effect of tax enforcement on tax morale

Author Info

Listed author(s):
  • Antonio Filippin

    ()

    (University of Milan)

  • Carlo V. Fiorio

    ()

    (University of Milan)

  • Eliana Viviano

    ()

    (Bank of Italy)

Abstract

In this paper we argue that tax enforcement is an additional contextual factor affecting tax morale, one of the most important determinants of tax compliance. By using a unique dataset that merges a representative sample of Italian households with administrative data on tax enforcement, we find first that tax morale is positively correlated with tax enforcement. Second, to deal with possible endogeneity of tax enforcement, we show that results are confirmed in an IV specification using the change in the tax gap at the provincial level as an instrument for tax enforcement. Finally, we provide evidence that the impact of tax enforcement and social environment is stronger at low quantiles of tax morale. Our results show that apart from lowering the expected value of tax evasion, tax enforcement has an additional and indirect effect on tax compliance through its effect on tax morale.

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File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2013/2013-0937/en_tema_937.pdf
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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 937.

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Date of creation: Oct 2013
Handle: RePEc:bdi:wptemi:td_937_13
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Keywords: tax morale; tax enforcement; tax gap;

Other versions of this item:

Find related papers by JEL classification:
  • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
  • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
  • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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  1. Ronald G. Cummings & Jorge Martinez-Vazquez & Michael McKee & Benno Torgler, 2005. "Effects of Tax Morale on Tax Compliance: Experimental and Survey Evidence," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0516, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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Cited by:

  1. Dulleck, Uwe & Fooken, Jonas & Newton, Cameron & Ristl, Andrea & Schaffner, Markus & Torgler, Benno, 2016. "Tax compliance and psychic costs: Behavioral experimental evidence using a physiological marker," Journal of Public Economics, Elsevier, vol. 134(C), pages 9-18.
  2. Jana Friedrichsen & Dirk Engelmann, 2017. "Who Cares about Social Image?," Discussion Papers of DIW Berlin 1634, DIW Berlin, German Institute for Economic Research.
  3. Gloria Alarcón García & José Daniel Buendía Azorín & María del Mar Sánchez Vega, 2016. "El rechazo al fraude fiscal en España: antes y después de la Gran crisis," Hacienda Pública Española, IEF, vol. 218(3), pages 33-56, September.
  4. Jana Friedrichsen & Dirk Engelmann, 2013. "Who Cares for Social Image? Interactions between Intrinsic Motivation and Social Image Concerns," CESifo Working Paper Series 4514, CESifo Group Munich.
  5. Friedrichsen, Jana, 2016. "Signals sell: Designing a product line when consumers have social image concerns," Discussion Papers, Research Unit: Market Behavior SP II 2016-202, Social Science Research Center Berlin (WZB).
  6. Raitano, Michele & Fantozzi, Roberto, 2015. "Political cycle and reported labour incomes in Italy: Quasi-experimental evidence on tax evasion," European Journal of Political Economy, Elsevier, vol. 39(C), pages 269-280.

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