How does petty corruption affect tax morale in sub-Saharan Africa?: An empirical analysis

Abstract

This study has been prepared within the UNU-WIDER project on 'The political economy of social protection 'The political economy of social protection systems', which is part of a larger research project on 'The economics and politics of taxation and social protection'. Abstract: Revenues from taxation gain importance to finance economic development in sub-Saharan Africa. Extortion of bribes by public officials can provide one obstacle for tax compliance. This paper uses micro-level data from the Afrobarometer to analyse how petty corruption erodes tax morale. A mediation analysis shows that petty corruption directly reduces tax morale but also diminishes trust in the tax department and hence indirectly affects tax morale. The effect on tax morale is more severe in countries and regions where fewer people are affected by petty corruption and becomes insignificant if extortion of bribes is particularly prevalent.

Tax morale and institutional theory: a systematic review

“…in public authorities is associated with high tax moraleAlm and Torgler (2006),Andriani (2016),Chan et al (2018),Daude et al (2012),Feld and Torgler (2007),Filippin et al (2013),Frey and Torgler (2007),Ibrahim et al (2015),Jahnke (2015),Kondelaji et al (2016), Lago-Peñas and Lago-Peñas (2010),Leonardo (2011),Leonardo and Martinez-Vazquez (2016),Li (2010),Martinez-Vazquez and Torgler (2009),Ristovska et al (2013),Torgler (2003aTorgler ( , b, c, d, 2004aTorgler ( , b, c, 2005aTorgler ( , b, c, 2012,Torgler and Murphy (2004),Torgler and Schaffner (2007),Torgler and Schneider (2004),Torgler et al ( , b, 2008Torgler et al ( , 2010, Trüdinger and Hildebrandt (2013), Vythelingum et al (2017) Government quality/ spending effectiveness Higher perceived quality/effectiveness of spending is associated with higher tax morale Alasfour et al (2016), Alm and Gomez (2008), Barone and Mocetti (2011), Frey and Torgler (2007), Molero and Pujol (2012), Sipos (2015), Vythelingum et al (2017) Government fairness (including fairness of tax system) The higher the perceived fairness of the government, the higher the tax morale Alasfour et al (2016), Alm and Gomez (2008), Çevik (2016), Cyan et al (2016), Cummings et al (2005, 2009), Frey (2003), Niesiobędzka (2014), Torgler and Schaffner (2007), Torgler et al (2008), Vythelingum et al (2017) Deterrence measures No relationship with tax morale Torgler (2003a, b, c), Torgler et al (2010) High risk of detection/expected sanctions associated with higher tax morale Torgler and Werner (2005), Torgler et al (2007a), Williams and Horodnic (2016c) Structural conditions GDP/ GNP Positive impact on tax morale/ positive correlated Doerrenberg and Peichl (2010), Gerstenbluth et al (2012), Williams and Krasniqi (2017), Williams and Martinez (2014) Government expenditure (i.e. social protection, education, health) Positive impact on tax morale Doerrenberg and Peichl (2010), Williams and Horodnic (2016c), Williams and Krasniqi (2017), Williams and Martinez (2014tax morale Gerstenbluth et al (2012), Trüdinger and Hildebrandt (2013), Williams and Krasniqi (2017), Williams and Martinez (2014) Corruption Wider corruption is associated with lower tax morale Alasfour et al (2016), Gerstenbluth et al (2012), Jahnke (2015), Torgler (2006), Torgler et al (2008), Williams and Krasniqi (2017), Williams and Martinez (2014) (continued )…”

A Model to Explain the Impact of Government Revenue on the Quality of Governance and the SDGs

“…Other researchers have used empirical methods to confirm this (Igbinovia and Marcella Ekwueme 2020;Dang et al 2022;Abbas et al 2021;Almustafa et al 2023;Musa et al 2023). Jahnke (2017) shows that a lower perception of corruption is associated with higher tax compliance using Afro barometer survey results (Jahnke 2017). Baskaran and Bigsten (2013) argued that there are reasons why we should expect a relationship between fiscal capacity and quality of governance in Africa and empirically studied the impact of increased tax revenue on governance.…”

Governance quality and tax morale and compliance in Zimbabwe’s informal sector

“…The effectiveness of revenue administration and the actions of tax administrators are also included here as these have an influence on both tax morale and tax compliance (Dickerson, 2014;Horodnic, 2018;Vythelingum et al, 2017). Control of corruption is judged basing on the extent to which power is misused to gain undue advantage (Jahnke, 2015(Jahnke, , 2017. In countries where corruption is high or perceived to be high taxpayers tend to lose trust in the state and become unwilling to pay tax thus diminishing tax compliance levels .…”