The effect of tax enforcement on tax morale

Antonio Filippin, Carlo Fiorio () and Eliana Viviano

No 937, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: In this paper we argue that tax enforcement is an additional contextual factor affecting tax morale, one of the most important determinants of tax compliance. By using a unique dataset that merges a representative sample of Italian households with administrative data on tax enforcement, we find first that tax morale is positively correlated with tax enforcement. Second, to deal with possible endogeneity of tax enforcement, we show that results are confirmed in an IV specification using the change in the tax gap at the provincial level as an instrument for tax enforcement. Finally, we provide evidence that the impact of tax enforcement and social environment is stronger at low quantiles of tax morale. Our results show that apart from lowering the expected value of tax evasion, tax enforcement has an additional and indirect effect on tax compliance through its effect on tax morale.

Keywords: tax morale; tax enforcement; tax gap (search for similar items in EconPapers)
JEL-codes: D70 H26 H29 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-eur, nep-iue, nep-law, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Journal Article: The effect of tax enforcement on tax morale (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_937_13

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