Tax Morale What Drives People and Businesses to Pay Tax?

Description

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. Foreword Table of contents Abbreviations and acronyms Executive Summary Context Tax morale in individuals Tax morale in businesses Next Steps Policy considerations Individuals: Businesses (especially MNEs): Further research Individuals Businesses References 1 Tax morale in individuals 1.1. Tax morale in the world today: global analysis 1.2. Tax morale by region - Africa 1.3. Tax morale by region - Latin America 1.4. Tax morale by region - Asia 1.5. Conclusions and next steps References Notes 2 Tax morale in businesses 2.1. Why is business tax morale important? 2.2. Existing research 2.3. MNE tax morale – lessons from a survey on tax certainty 2.4. The sources of tax uncertainty 2.5. Tools to foster tax certainty and possible lessons for tax morale 2.6. Policy considerations and further research Notes Annex A. Methodology – Individuals Countries covered in the analysis World Values Survey 2010-13 Latinobarómetro 2016 Afrobarometer 2015 Variables and questions used Methodology Possible caveats Probit estimation results Annex B. Methodology – Business Data Methodology References Notes Annex A. Methodology – Individuals Annex B. Methodology – Business