Explaining Cross-National Variations in Tax Morality in the European Union: An Exploratory Analysis

Studies of Transition States and Societies, July 2014, Vol. 6, No. 1, pp. 5-18

14 Pages Posted: 27 Dec 2015

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Alvaro Martinez

University of Sheffield

Date Written: 2014

Abstract

The aim of this paper is to conduct an exploratory analysis of factors that might explain the cross-national variations in the level tax morality across the European Union. In order to do this, three competing explanations for the cross-national variations in tax morality will be evaluated which variously view lower levels of tax morality to be a result of either: under-development (a modernisation explanation); high taxes, state corruption and too much state interference (a neo-liberal explanation), or too little state redistribution and intervention to protect citizens (a structuralist explanation). Evaluating the cross-national variations in tax morality reported in a 2007 Eurobarometer survey using multilevel econometric techniques, the finding is that the tax morality of a baseline European citizen is higher in more developed and less corrupt nations and in countries with higher levels of taxation, social protection and redistribution. The outcome is a call for a synthesis of the three explanations in the form of a new neo-modernisation explanation which, contrary to neo-liberal discourse, argues that developed nations with higher levels of taxation, greater levels of social protection and higher levels of redistribution have higher levels of tax morality. The tentative policy implications are then discussed.

Keywords: informal economy, tax morality, taxation, neo-liberalism, social Europe

JEL Classification: H26, J46, J48, K34, K42, O17, P2, P3

Suggested Citation

Williams, Colin and Martinez, Alvaro, Explaining Cross-National Variations in Tax Morality in the European Union: An Exploratory Analysis (2014). Studies of Transition States and Societies, July 2014, Vol. 6, No. 1, pp. 5-18, Available at SSRN: https://ssrn.com/abstract=2708404

Colin Williams (Contact Author)

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

HOME PAGE: http://https://www.sheffield.ac.uk/management/staff/williams/index

Alvaro Martinez

University of Sheffield ( email )

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

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