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Tax Morale

What Drives People and Businesses to Pay Tax?

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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.

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Tax morale in businesses

This chapter focuses on tax morale in businesses, where there is limited existing research, especially in relation to developing countries. The chapter uses new data on tax certainty as a proxy for tax morale, to identify some of the factors likely to influence MNEs, and possible policy responses.  In addition, in recognition of the limitations of tax certainty as a proxy, further research opportunities are identified including assessing the role of voluntary tax and business principles on MNE tax morale.

English

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