State Capacity and Tolerance towards Tax Evasion: First Evidence from Romania

Vâlsan, Călin; Druică, Elena; Ianole-Călin, Rodica

doi:10.3390/admsci10020033

Cited by 14 publications

(7 citation statements)

References 47 publications

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“…Our empirical model is highly parsimonious and indicates three major influences (from an initial list of 13 variables from the WVS dataset) that can predict bribery tolerance with a 91.69% accuracy of classification: the attitude towards cheating on taxes, the attitude towards claiming government benefits to which a person is not entitled, and the attitude towards violence against other people. The first two individual attitudes reflect upon people's relationship with the state and are considered "the usual suspects" for actual participation in corrupt practices in numerous studies conducted in transition [38,39] and developing economies [40]. Thus, our findings align with the literature for the narrower case of bribery tolerance and they further expand their predictive validity by covering a much larger spectrum of 105 worldwide countries.…”

Section: Discussionsupporting

confidence: 81%

A Robust Approach for Identifying the Major Components of the Bribery Tolerance Index

2021

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The paper aims to emphasize the advantages of several advanced statistical and data mining techniques when applied to the dense literature on corruption measurements and determinants. For this purpose, we used all seven waves of the World Values Survey and we employed the Naive Bayes technique in SQL Server Analysis Services 2016, the LASSO package together with logit and melogit regressions with raw coefficients in Stata 16. We further conducted different types of tests and cross-validations on the wave, country, gender, and age categories. For eliminating multicollinearity, we used predictor correlation matrices. Moreover, we assessed the maximum computed variance inflation factor (VIF) against a maximum acceptable threshold, depending on the model’s R squared in Ordinary Least Square (OLS) regressions. Our main contribution consists of a methodology for exploring and validating the most important predictors of the risk associated with bribery tolerance. We found the significant role of three influences corresponding to questions about attitudes towards the property, authority, and public services, and other people in terms of anti-cheating, anti-evasion, and anti-violence. We used scobit, probit, and logit regressions with average marginal effects to build and test the index based on these attitudes. We successfully tested the index using also risk prediction nomograms and accuracy measurements (AUCROC > 0.9).

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Section: Discussionsupporting

confidence: 81%

A Robust Approach for Identifying the Major Components of the Bribery Tolerance Index

2021

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“…When this asymmetry is greater, tax morale is lower and tax non-compliance is higher (Alm et al 2010;Torgler 2007Torgler , 2011. This finding that tax non-compliance is greater when there is a lower level of vertical trust has been revealed in individual country studies (Vâlsan et al 2020;Williams and Franic 2016;Windebank and Horodnic 2017), studies of different European regions (Williams and Horodnic 2017b) and in the EU as a whole (Williams and Horodnic 2017a;. To tackle tax non-compliance, the goal is consequently to increase vertical trust to improve the willingness of the population to comply and self-regulate (Kirchler 2007;Torgler 2007Torgler , 2011.…”

Section: Voluntary Compliance: Social Actor Theorymentioning

confidence: 73%

Evaluating Public Administration Approaches towards Tax Non-Compliance in Europe

Williams

2020

Administrative Sciences

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Those engaging in tax non-compliance have been conventionally explained as rational economic actors partaking when the benefits outweigh the costs, and thus public administrations have sought to enforce compliance using a deterrence approach which increases the risk of detection and penalties. However, many have been found to not engage in tax non-compliance when the benefits exceed the costs. The result has been the emergence of a voluntary compliance approach viewing taxpayers as social actors who engage in tax non-compliance when there is a lack of vertical trust (in governments) and horizontal trust (in others). Using a probit regression analysis of data from special Eurobarometer surveys conducted in 2007, 2013 and 2019, the finding is that although the likelihood of participating in tax non-compliance is largely not associated with the level of penalties and risk of detection, it is significantly associated with the level of vertical and horizontal trust, with participation in tax non-compliance increasing with lower vertical and horizontal trust. The implications for theory and for how public administrations tackle tax non-compliance are then discussed.

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“…Thus, understanding the motivation for compliance in this particular case also confirms the limits of the rational actor approach, as suggested in the literature review section, revealing the stringent need to build and strengthen trust and social capital. This aspect is reinforced by recent research pointing to the fact that the perceptions of a weak state capacity, respectively of lack of distributive justice, are factors that enhance the level of tolerance towards tax evasion and informal economy practices (Vâlsan et al, 2020). More so, peer effects expressed as neighbours' behaviour have been shown to positively impact tax compliance (Alm et al, 2017), setting an important precedent for even more visible changes, like in the case of improving building facades.…”

Section: Discussionmentioning

confidence: 98%

Regulating the Urban Commons: A Romanian Case Study of Improving Building Facades

Vrabie

Ianole-Călin

2020

CEPAR

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This paper examines the effect of build environment regulations for facades emergency repairs and embellishment, as implemented by the city of Cluj-Napoca, the second largest municipality in Romania. The scope was to identify to what extent the over taxation measure was efficient in generating compliant behaviour and what secondary effects it may have generated in people’s attitude towards the local authorities. We conducted structured interviews with 25 homeowners targeted by the policy. The qualitative analysis uncovers structural issues on how the policy was implemented and communicated to the population. It further acknowledges difficulties in managing mixed property and collective actions. We interpret the findings as a first step towards building a more comprehensive research framework focused also on included behavioural insights, as captured by our recommendations. Namely, they illustrate that homeowners were critical about the measure, both in its rationale and its implementation, and were unable to act upon a cost-benefit analysis given the ambiguous available information. The findings further acknowledge difficulties in managing mixed property and collective actions, but they also hint favourably towards the role of peer effects, expressed here as compliant neighbours’ behaviour. We interpret the results of this exploratory case study as a first step towards building a more comprehensive approach to serve as a toolkit in examining the development of innovative local policies in post-communist environments, through a combined research framework including also the significant contribution of behavioural insights, next to the traditional rational actor theories. Naturally, the usual limitations of the method also apply to our study, in the sense of non-generalizable conclusions. This fuels up the need for further research on similar regional and urban challenges in an extended multiple-case study scheme.

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State Capacity and Tolerance towards Tax Evasion: First Evidence from Romania

Cited by 14 publications

References 47 publications

A Robust Approach for Identifying the Major Components of the Bribery Tolerance Index

A Robust Approach for Identifying the Major Components of the Bribery Tolerance Index

Evaluating Public Administration Approaches towards Tax Non-Compliance in Europe

Regulating the Urban Commons: A Romanian Case Study of Improving Building Facades

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