Tax Morale and Public Spending Inefficiency

37 Pages Posted: 12 May 2010

Date Written: November 13, 2009


Tax evasion is a widespread phenomenon and encouraging tax compliance is an important and much debated policy issue. Many studies have shown that tax cheating has to be attributed to a considerable extent to the tax morale of taxpayers. The aim of the present paper is to shed light on the relationship between the taxpayer and the public sector. Specifically, we investigate whether public spending inefficiency shapes individual tax morale. Combining data from Italian municipalities’ balance sheets with individual data from a properly designed survey on tax morale, we find that the attitude towards paying taxes is better when resources are spent more efficiently. This does not appear to be due to some confounding factors at the municipality level or to spatial sorting of citizens. It is also robust to alternative measures of both inefficiency and tax morale.

Keywords: tax morale, public spending inefficiency

JEL Classification: D24, H11, H26, H72

Suggested Citation

Barone, Guglielmo and Mocetti, Sauro, Tax Morale and Public Spending Inefficiency (November 13, 2009). Bank of Italy Temi di Discussione (Working Paper) No. 732. Available at SSRN: or

Guglielmo Barone

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

Sauro Mocetti (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

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