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Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale

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  • Lars P. Feld
  • Bruno S. Frey

Abstract

The traditional economic approach to tax evasion does not appear to be particularly successful in explaining the extent of tax compliance. We argue instead that a psychological tax contract which establishes a fiscal exchange between the state and the citizens shapes tax compliance to a large extent. In that respect, a case study of Switzerland is useful because the small size of the cantons and their direct democratic political systems procedurally establish a close exchange relationship between taxpayers and tax authorities. In this paper, evidence is discussed on how tax evasion and tax morale in Switzerland evolved over time. In addition, the impact of economic, legal, socio-demographic, psychological and institutional factors on Swiss tax evasion is discussed.

Suggested Citation

  • Lars P. Feld & Bruno S. Frey, 2006. "Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale," IEW - Working Papers 284, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:284
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Globally Speaking, American Taxpayers are Pushovers
      by J.D. Tuccille in Hit & Run blog on 2012-04-17 21:33:00

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    Cited by:

    1. Reto Foellmi & Isabel Z. Martínez, 2017. "Volatile Top Income Shares in Switzerland? Reassessing the Evolution between 1981 and 2010," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 793-809, December.
    2. Martin Abraham & Kerstin Lorek & Friedemann Richter & Matthias Wrede, 2017. "Collusive tax evasion and social norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 179-197, April.
    3. Leder, Susanne & Mannetti, Lucia & Hölzl, Erik & Kirchler, Erich, 2010. "Regulatory fit effects on perceived fiscal exchange and tax compliance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 271-277, April.
    4. repec:tur:wpaper:1 is not listed on IDEAS
    5. Faeyz M. J. Abuamria, 2019. "The Effect of Deterrence Factors on Discourage Shadow Economy Level and Tax Evasion," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(1), pages 65-70, January.
    6. Felix Schmutz, 2016. "Measuring the Invisible: An Overview of and Outlook for Tax Non-Compliance Estimates and Measurement Methods for Switzerland," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 152(2), pages 125-177, April.
    7. Hug, Simon & Spörri, Franziska, 2011. "Referendums, trust, and tax evasion," European Journal of Political Economy, Elsevier, vol. 27(1), pages 120-131, March.
    8. Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2008. "The Runaway Taxpayer or: Is Prior Tax Notice Effective against Scofflaws?," Working papers 01, Former Department of Economics and Public Finance "G. Prato", University of Torino.
    9. Amjad Abdallah Alkhatib & Hijattulah Abdul-Jabbar & Munusamy Marimuthu, 2018. "The Effects of Deterrence Factors on Income Tax Evasion among Palestinian SMEs," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(4), pages 144-152, October.

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    More about this item

    Keywords

    Tax Evasion; Tax Morale; Deterrence; Responsive Regulation;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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