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Is tax morale culturally driven?

Published online by Cambridge University Press:  23 February 2021

Luca Andriani ,
Randolph Bruno Open the ORCID record for Randolph Bruno [Opens in a new window] ,
Elodie Douarin Open the ORCID record for Elodie Douarin [Opens in a new window]  and
Paulina Stepien-Baig
Luca Andriani*
Affiliation:
Department of Management, Birkbeck University of London, London, UK
Randolph Bruno
Affiliation:
School of Slavonic and East European Studies, University College London, London, UK IZA, Institute of Labor, Bonn, Germany Fondazione Rodolfo DeBenedetti, Milan, Italy
Elodie Douarin
Affiliation:
School of Slavonic and East European Studies, University College London, London, UK
Paulina Stepien-Baig
Affiliation:
School of Slavonic and East European Studies, University College London, London, UK
*
*Corresponding author. Email: luca.andriani@bbk.ac.uk
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Abstract

Citizens' tax compliance should not only respond to the quality of formal institutions, but might also be culturally driven. We contribute to this literature by investigating whether tax morale, an individual's intrinsic non-pecuniary motivation to comply with taxes, is associated with the cultural values (following Hofstede's typology) held by this individual. The analysis exploits four waves of the European Values Survey (1981–2010) across 48 countries. The cultural dimensions are constructed through a polychoric principal component analysis on a set of relevant survey items consistent with Hofstede's definitions. Ordered logit estimations suggest that although values of individualism and femininity are associated with higher individual's tax morale, power distance and uncertainty avoidance are associated with lower tax morale. These results remain consistent as we increase the level of granularity of our investigation through within-region analyses and, subsequently, within-cohort analyses. We argue that these results inevitably enrich the emerging debate about cultural values and citizens' compliance with formal institutions. They also indicate that societal culture as well as individual values should be considered when designing policies aiming to improve tax compliance.

Keywords

Culturecultural dimensionsEVSHofstedeinstitutionstax morale
Type
Research Article
Information
Journal of Institutional Economics , Volume 18 , Special Issue 1: Institutions and Culture in Economic Contexts , February 2022 , pp. 67 - 84
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

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