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Tax Compliance Under Different Institutional Settings in the EU: An Experimental Analysis

27 Pages Posted: 7 Aug 2015  

Stefania Ottone

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Quantitative Methods and Business Strategies (DEMS)

Ferruccio Ponzano

Università degli Studi di Milano-Bicocca - Department of Economics, Quantitative Methods and Business Strategies (DEMS)

Giulia Andrighetto

European University Institute - Department of Political and Social Sciences (SPS)

Date Written: August 7, 2015

Abstract

In this paper we study how people from different European countries would react, in terms of tax compliance, to institutional changes. We choose an experimental setting and we focus on two features of the tax system - efficiency and tax rate. We develop our analysis in three countries characterized by different systems: Italy, Sweden, UK. The main finding is that participants from different countries react with the same intensity to efficiency changes but not to increases in the tax rate. In all countries tax compliance decreases as tax rate increases, but the reaction is stronger in Italy and softer in UK. Policy implications - mostly focused on fiscal harmonization - follow.

Keywords: tax compliance, fiscal harmonization, cross-country comparison, efficiency, tax rate

JEL Classification: C9, D31, H26

Suggested Citation

Ottone, Stefania and Ponzano, Ferruccio and Andrighetto, Giulia, Tax Compliance Under Different Institutional Settings in the EU: An Experimental Analysis (August 7, 2015). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 307. Available at SSRN: https://ssrn.com/abstract=2641069 or http://dx.doi.org/10.2139/ssrn.2641069

Stefania Ottone (Contact Author)

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Quantitative Methods and Business Strategies (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Ferruccio Ponzano

Università degli Studi di Milano-Bicocca - Department of Economics, Quantitative Methods and Business Strategies (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Giulia Andrighetto

European University Institute - Department of Political and Social Sciences (SPS) ( email )

Via dei Roccettini 9
San Domenico di Fiesole
Florence, 50014
Italy

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