Tax Morale

What Drives People and Businesses to Pay Tax?

image of Tax Morale

Unlocking what drives tax morale – the intrinsic willingness to pay tax – can greatly assist governments in the design of tax policies and their administration, particularly in developing countries where compliance rates are low. This report builds on previous OECD research to identify some of the key socio-economic and institutional drivers of tax morale across developing countries, and seeks to test for evidence of the social contract by examining the impact of public services on tax morale. It also uses new data on tax certainty as an entry point to explore tax morale in businesses, where existing research is very limited. Finally, the report identifies a range of factors related to the tax system that may affect business decision making, how they vary across regions, and suggests some areas for future research. Overall, the report provides a range of suggestions for further work, and how tax morale considerations can be integrated into holistic tax compliance strategies.

English Also available in: French

Tax morale in individuals

This chapter focuses on the drivers of tax morale of individuals.  Using micro-econometric analysis of public opinion surveys at the global and regional levels it identifies a number of socio-economic and institutional factors that influence tax morale. The chapter also discusses a number of policy responses to help build tax morale, including taxpayer education programmes, behavioural economics approaches, and hypothecated taxes. While more detailed country level analysis is required before embarking on concrete policy changes, the overview provided in this chapter provides a starting point for discussion and further research on the role of tax morale in developing countries.

English Also available in: French

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