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The effect of tax enforcement on tax morale

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  • 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.

Suggested Citation

  • Antonio Filippin & Carlo V. Fiorio & Eliana Viviano, 2013. "The effect of tax enforcement on tax morale," Temi di discussione (Economic working papers) 937, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_937_13
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    Cited by:

    1. Bruno, Randolph Luca, 2019. "Tax enforcement, tax compliance and tax morale in transition economies: A theoretical model," European Journal of Political Economy, Elsevier, vol. 56(C), pages 193-211.
    2. Marco Battaglini & Luigi Guiso & Chiara Lacava & Eleonora Patacchini, 2019. "Tax Professionals: Tax-Evasion Facilitators or Information Hubs?," NBER Working Papers 25745, National Bureau of Economic Research, Inc.
    3. 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.
    4. Abraham, Martin & Lorek, Kerstin & Richter, Friedemann & Wrede, Matthias, 2018. "Breaking the norms: When is evading inheritance taxes socially acceptable?," European Journal of Political Economy, Elsevier, vol. 52(C), pages 85-102.
    5. Friedrichsen, Jana & Engelmann, Dirk, 2018. "Who cares about social image?," European Economic Review, Elsevier, vol. 110(C), pages 61-77.
    6. Immordino, Giovanni & Russo, Francesco Flaviano, 2018. "Cashless payments and tax evasion," European Journal of Political Economy, Elsevier, vol. 55(C), pages 36-43.
    7. Jana Friedrichsen & Dirk Engelmann, 2013. "Who Cares for Social Image? Interactions between Intrinsic Motivation and Social Image Concerns," CESifo Working Paper Series 4514, CESifo.
    8. Lorenzo Burlon, 2017. "Public expenditure distribution, voting, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(4), pages 789-810, August.
    9. Jana Friedrichsen & Dirk Engelmann, 2013. "Who Cares for Social Image? Interactions between Intrinsic Motivation and Social Image Concerns," CESifo Working Paper Series 4514, CESifo.
    10. Gabriel Leonardo & Jorge Martinez-Vazquez, 2016. "Politicians, bureaucrats, and tax morale: What shapes tax compliance attitudes?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1608, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Ayşegül KAYAOĞLU & Colin C. WILLIAM, 2020. "Explaining Tax Non-Compliance from a Neo-Institutionalist Perspective: Some Lessons from a Public Opinion Survey in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 28(43).
    12. Friedrichsen, Jana, 2018. "Signals Sell: Product Lines when Consumers Differ Both in Taste for Quality and Image Concern," Rationality and Competition Discussion Paper Series 70, CRC TRR 190 Rationality and Competition.
    13. 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, WZB Berlin Social Science Center.
    14. 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.
    15. 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 / Review of Public Economics, IEF, vol. 218(3), pages 33-56, September.

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    More about this item

    Keywords

    tax morale; tax enforcement; tax gap;
    All these keywords.

    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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