Analyzing Determinants of Tax Morale based on Social Psychology Theory: Case study of Iran

Authors

Department of Economics, University of Isfahan, Isfahan, Iran.

Abstract

While economic deterrence models are fully based on maximizing economic utility; social psychology models explain human behavior by examining the underlying attitudes, norms and beliefs. Tax morale is defined as the intrinsic motivation to pay taxes. However, determinants of tax morale need to be investigated for a more comprehensive understanding of tax morale. In this paper we analyze the most important determinants of tax morale in Iran using data from World Values Surveys (WVS). Determinants of tax morale are categorized into four main groups: social capital, conditional cooperation, demographic factors and economic situation of the respondents. Estimating ordered probit model, we find that conditional cooperation and economic situation have the most important effects on tax morality. However, some of the social capital variables like importance of politics and religion and demographic factors like gender and marital status don’t have significant effect on tax morale in Iran.

Keywords


Ajzen, I. (1991). The Theory of Planned Behavior. Organizational Behavior and Human Decision Processes, 50(2), 179-211.

Ajzen, I., & Fishbein, M. (1980). Understanding Attitudes and Predicting Social Behavior. Englewood Cliffs, NJ: Prentice Hall.

Alm, J., & Torgler, B. (2006). Culture Differences and Tax Morale in the United States and Europe. Journal of Economic Psychology, 27, 224-246.

Alm, J. (2012). Measuring, Explaining, and Controlling Tax Evasion: Lessons from Theory, Experiments, and Field Studies. International Tax and Public Finance, 1(19), 54-77.

Alon, A., & Hageman, A. (2013). The Impact of Corruption on Firm Tax Compliance in Transition Economies: Whom Do You Trust? Journal of Business Ethics, 116, 479–494.

Arrington, C., & Reckers, P. M. J. (1985). A Social-Psychological Investigation into Perceptions of Tax Evasion. Accounting and Business Research, 15(59), 163–176.

Bénabou, R. & Tirole, J. (2011). Identity, Morals, and Taboos: Beliefs as Assets. The Quarterly Journal of Economics, 126(2), 805-855.

Besley, T., Jensen, A., & Persson, T. (2015). Norms, Enforcement, and Tax Evasion. Technical Report, Mimeo, Retrieved from

Bilgin, Cevat, (2014). Determinants of Tax Morale in Spain and Turkey: An Empirical Analysis. European Journal of Government and Economics, 3(1), Retrieved from

Bobek, D. D., Roberts, R. W., & Sweeney, J. T. (2007). The Social Norms of Tax Compliance: Evidence from Australia, Singapore, and the United States. Journal of Business Ethics, 74(1), 49-64.

Cummings, R. G., Martinez-Vazquez, J., McKee, M., & Torgler, B. (2009). Tax Morale Affects Tax Compliance: Evidence from Surveys and an Artefactual Field Experiment. Journal of Economic Behavior & Organization, 70(3), 447–457.

Devos, K. (2005). The Attitudes of Tertiary Students on Tax Evasion and the Penalties for Tax Evasion - A Pilot Study and Demographic Analysis. E-Journal of Tax Research, 3(2), 222–273.

Doerrenberg, P., & Peichl, A. (2013). Progressive Taxation and Tax Morale. Public Choice, 155(3–4), 293–316.

Duch, R., Palmer, H., & Anderson, C. (2000). Heterogeneity in Perceptions of National Economic Conditions. Journal of Political Science, 44, 635–652.

Elffers, H. (1991). Income Tax Evasion: Theory and Measurement. Deventer, Netherlands: Kluwer Academic Publishers.

Frey, B., & Torgler, B. (2007). Taxation and Conditional Cooperation. Journal of Comparative Economics, 35, 136–159.

Hirschi, T., & Stark, R. (1969). Hellfire and Delinquency. Social Problems, 17, 202–213.

Jackson, B., & Milliron, V. (1986). Tax Compliance Research: Findings, Problems, and Prospects.  Journal of Accounting Literature, 5, 125–165.

Kaplan, S., Reckers, P. M. J., & Roark, S. (1988). An Attribution Theory Analysis of Tax Evasion Related Judgments. Accounting, Organizations and Society, 13(4), 371–379.

Kaynar-Bilgin, H. (2011). Türkiye'de Vergi Ahlakının Belirleyicileri. Odtü Gelişme, 38(2), 167-190.

King, S., & Sheffrin, S. (2002). Tax Evasion and Equity Theory: An Investigative Approach. International Tax and Public Finance, 9(4), 505–521.

Lago-Penas, I., & Lago-Penas, S. (2010). The Determinants of Tax Morale in Comparative Perspective: Evidence from European Countries. European Journal of Political Economy, 26, 441–453.

Lewis, A. (1982). The Psychology of Taxation. Oxford: Blackwell.

Martínez-Vázquez, J., & Torgler, B., (2009). The Evolution of Tax Morale in Modern Spain. Journal of Economic Issues, 43(1), 1–28.

McKerchar, M., Bloomquist, K., & Pope, J. (2013). Indicators of Tax Morale: an Exploratory Study. E-Journal of Tax Research, 11(1), 5–22.

Richardson, G. (2008). The Relationship between Culture and Tax Evasion across Countries: Additional Evidence and Extensions. Journal of International Accounting Auditing and Taxation, 17(2), 67–78.

Ritsema, C., Thomas, D., & Ferrier, G. (2003). Economic and Behavioral Determinants of Tax Compliance: Evidence from the 1997 Arkansas Tax Penalty Amnesty Program. In Paper prepared for 2003 IRS Research Conference, Retrieved from

https://www.irs.gov/pub/irs-soi/ritsema.pdf.

Ross, A., & McGee, R. (2012). Education Level and Ethical Attitude toward Tax Evasion: A Six Country Study. Journal of Legal, Ethical and Regulatory Issues, 15(2), 93–138.

Schmolders, G. (1959). Fiscal Psychology: A New Branch of Public Finance. National Tax Journal, 12(4), 340–345.

Schnellenbach, J. (2006). Tax Morale and the Taming of Leviathan. Constitutional Political Economy, 17, 117-132.

Slemrod, J. (2002). Trust in Public Finance. National Bureau of Economic Research, Working Paper, Retrieved from

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjaz8OfzsXQAhVBCBoKHZv5C_QQFggiMAE&url=http%3A%2F%2Fwww.bus.umich.edu%2FOTPR%2FWP2002-7paper.pdf&usg=AFQjCNGti88E6jt9L-txz7d9WC545tMHXQ.

Smart, M. (2012). The Application of the Theory of Planned Behavior and Structural Equation Modeling in Tax Compliance Behavior: A New Zealand Study (Doctoral Dissertation, University of Canterbury, New Zealand). Retrieved from

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjYhYrVz8XQAhUCBBoKHaY4CAkQFggaMAA&url=http%3A%2F%2Fir.canterbury.ac.nz%2Fbitstream%2Fhandle%2F10092%2F7528%2Fthesis_fulltext.pdf%3Fsequence%3D1&usg=AFQjCNHbAkTHS1i5gMaXmAtaEOwdGI_i0A.

Tittle, C. (1980). Sanctions and Social Deviance: The Question of Deterrence. New York: Praeger.

Torgler, B. (2002). Does Culture Matter? Tax Morale in an East-West-German Comparison. FinanzArchiv/ Public Finance Analysis, 59(4), 504–528.

Torgler, B. (2003). Tax Morale in Transition Countries. Post-Communist Economies, 15(3), 357–381.

Torgler, B. (2006). The Importance of Faith: Tax Morale and Religiosity. Journal of Economic Behavior & Organization, 61(1), 81–109.

Torgler, B. (2007). Tax Compliance and Tax Morale: A Theoretical and Empirical Analysis. Cheltenham: Edward Elgar Publishing.

Torgler, B. (2012). Tax Morale, Eastern Europe and European Enlargement. Communist and Post-Communist Studies, 45, 11–25.

Torgler, B., & Schneider, F. (2007). What Shapes Attitudes toward Paying Taxes? Evidence from Multicultural European Countries. Social Science Quarterly, 88(2), 443–470.

Torgler, B., & Schneider, F., (2007b). What Shapes Attitudes toward Paying Taxes? Evidence from Multicultural European Countries. Social Science Quarterly, 88, 443–470.

Torgler, B., & Valev, N. (2010). Gender and Public Attitudes toward Corruption and Tax Evasion. Contemporary Economic Policy, 28(4), 554–568.