The quiet Portuguese: Are Portuguese taxpayers victims of fiscal illusion?

Abstract

This article discusses the four dimensions generating fiscal illusion through a survey answered by a sample of the population of the northern region of Portugal. These dimensions were (1) bias in the taxpayers' perception of the costs and benefits of public programs; (2) ignorance or inattention to fiscal reality (e.g. tax structure or associated collection); (3) taking advantage of the taxpayer's timing and expectations for an optimized tax collection; and (4) association of the surrounding socioeconomic reality with the tax structure. The results show that the most serious dimension present among the analyzed Portuguese taxpayers is the relative lack of attention to fiscal reality. Through an analysis using appropriate tests, it was observed that some dimensions, such as education and taxpayer income, significantly influence the individual risk of fiscal illusion.

Framework Proposal for the Analysis of Tax Illusion, Its Antecedents, and Consequents

“…In addition, the present research contemplates the suggestions of Buehn, Dell'anno, and Schneider (2018), the gap pointed out by Araújo, Mourã o, and Daraujo (2020), as well as with notes by Dziemianowicz et al (2017) and suggestions for future research by Silva and Siqueira (2013).…”

“…To carry out the study, a data collection instrument was developed, consisting of five blocks, to measure the following latent variables, namely: i) fiscal illusion (Araújo, Mourã o, & Daraujo, 2020); ii) citizen participation (Melloulia, Luna-Reyes, & Zhang, 2014); iii) open data (Vieira & Álvaro, 2018); iv) budget governance (OECD, 2014); and v) fiscal governance (Catarino, 2015;Abraham, 2019).…”

“…Corroborating this, Guziejewska (2021) refers to fiscal illusion as a misunderstanding of public finance, its mechanisms, and laws. Araújo, Mourã o, and Daraujo (2020) highlight the need for studies to identify new factors that may create a fiscal illusion.…”