Culture and Tax Compliance: a lab-in-the-field experiment in South Tyrol

Matthias Cologna () and Robin Scheuch
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Matthias Cologna: Free University of Bozen-Bolzano, Italy
Robin Scheuch: Max Planck Institute for Research on Collective Goods & University of Cologne

No BEMPS114, BEMPS - Bozen Economics & Management Paper Series from Faculty of Economics and Management at the Free University of Bozen

Abstract: Cross-cultural research on tax compliance provides two competing explanations for differences in tax paying behavior. The institutional explanation focuses on differences in institutions (e.g., fines, frequency of audits), while the cultural explanation emphasizes differences in culture as an important driver. Contrary to most other studies analyzing differences across countries, we take not only a within-country but a within-region perspective, specifically the Northern Italian region of South Tyrol. Here, two main linguistic - and cultural - groups, German and Italian, co-exist within the same institutional environment. We use a lab-in-the-field experiment with a non-student pool of 190 participants recruited in Bolzano/Bozen, the largest city in South Tyrol. We document that, while the overall level of evasion is similar, there is a difference in tax compliance between the two groups when differentiating between the intensive and extensive margin: Italian speakers evade larger amounts whereas German speakers tend to evade more often. Our experiment is completed by a belief elicitation task and a dice truth-telling game. For both groups perceived tax compliance is lower than actual tax compliance and German speaking taxpayers are perceived to be more compliant. In the dice game, Italian speakers report higher numbers than would be expected from a fair die.

Keywords: Tax Evasion; Culture; Beliefs; Honesty. (search for similar items in EconPapers)
JEL-codes: C91 C93 D91 H26 R10 (search for similar items in EconPapers)
Pages: [33 pages]
Date: 2025-05
New Economics Papers: this item is included in nep-exp, nep-iue and nep-soc
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