Do the catholic and protestant countries differ by their tax morale?

Abstract

The paper presents a model where illegal shadow production arises from tax evasion. The equilibrium size of the shadow production is determined by consumer moral valuations, possibly affected by the inherited culture or religion. The implications of the model are tested in the OECD data on groups of countries for two regimes 1979-1992 and 1992-2003. Evidence is found on a link between tax morale and shadow markets. No evidence, however, is found to support the view that the tax morale differs between the Catholic South and Protestant North in Europe. The results suggest that the earlier studies have overestimated the size of the shadow economies and that there has been a regime switch in the evolution of the shadow economies during the early 1990s.JEL Classification: C23, D43, H26, L13

Tax morale and institutional theory: a systematic review

“…Indeed, analysing Hofstede's dimensions of culture, the finding is that the level of tax morale is lower in those cultures where the distance to power is higher (Brink and Porcano, 2016). Turning to religion, no difference in tax morale between different religions has been identified (Alasfour et al, 2016;Kanniainen and Pääkkönen, 2010;Torgler, 2003d). However, religiosity, measured mostly as the frequency of attendance at church, is positively associated with tax morale (list of studies in Table II).…”

“…,MacGregor and Wilkinson (2012),Martinez-Vazquez and Torgler (2009), Martins and Gomes (2014),Ristovska et al (2013),Torgler (2003bTorgler ( , d, 2004b),Torgler and Schneider (2004),Trüdinger and Hildebrandt (2013) ReligionNo difference in tax morale between different religions Alasfour et al (2016),Kanniainen and Pääkkönen (2010), Torgler (2003d) Higher religious values/high attendance to church are associated with higher tax morale,Andriani (2016),Bilgin (2014),Daude et al (2012), Feld and Torgler (2007), Feld et al (2008,Frey and Torgler (2007), Lago-Peñas and Lago-Peñas (2010),Leonardo and Martinez-Vazquez (2016), Martinez-Vazquez and Torgler (…”

Cross-country variations in the participation of small businesses in the informal economy

“…The finding is that tax morale increases with trust in government and the judiciary, lower levels of perceived corruption, satisfaction with public services and national pride. Other country-level variables investigated, albeit by fewer studies, include trust in others to obey the law (Dong et al, 2012;Giachi, 2014), social security expenditure (Kanniainen and Pääkkönen, 2010) and tax rates (Lago-Peñas and Lago-Peñas, 2010). The finding is that lower tax morale is associated with a lower trust in others to obey the law, lower levels of social expenditure and higher tax burdens.…”