Trust in Government and the Willingness to Pay Taxes in Transition Countries

26 Pages Posted: 29 Aug 2015

See all articles by John E. Anderson

John E. Anderson

University of Nebraska at Lincoln - Department of Economics; Lincoln Institute of Land Policy

Date Written: July 11, 2015

Abstract

This paper examines citizen trust in government, willingness to pay taxes, and desire for redistribution in transition countries. A theoretical model of trust in government is developed explaining willingness to pay (WTP) for public goods and empirical models are estimated for improved public education, improved public health system, combating climate change, helping the needy, and income redistribution. Data are from the European Bank for Reconstruction and Development's Life in Transition Survey, 2010 (LITS II). Results confirm the theoretical model, with trust in government having a significant positive effect on WTP for public goods. Differences are found, however, among government institutions and public goods. Income is a significant factor contributing to trust in all social institutions, including government. Higher income citizens have greater WTP for public goods, including income redistribution. The possibility of upward mobility hypothesis is confirmed, with citizens expecting future income to be higher than current income being less supportive of redistribution.

Keywords: trust in government, transition economies, willingness to pay taxes, redistribution, taxation

JEL Classification: H11, H31, H41

Suggested Citation

Anderson, John E., Trust in Government and the Willingness to Pay Taxes in Transition Countries (July 11, 2015). Available at SSRN: https://ssrn.com/abstract=2652268 or http://dx.doi.org/10.2139/ssrn.2652268

John E. Anderson (Contact Author)

University of Nebraska at Lincoln - Department of Economics ( email )

Lincoln, NE 68588-0489
United States
402-472-1190 (Phone)
402-472-9700 (Fax)

Lincoln Institute of Land Policy ( email )

113 Brattle Street
Cambridge, MA 02138-3400
United States

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