Selfish Sharing? The Impact of the Sharing Economy on Tax Reporting Honesty

Abstract

In the last decade, advances in technology have significantly disrupted the way firms provide goods and services. At the forefront of this technological disruption is the sharing economy, where individuals earn income by providing services or sharing assets through peer-to-peer (P2P) platforms. With global revenues in the sharing economy projected to increase substantially in the next decade, income from this economy will continue to be an important source of tax revenues for governments around the world. However, sceptics argue that the sharing economy inherently lends itself to dishonest reporting of taxable income. We employ an online experiment, using 746 taxpayers, to observe whether the prosocial benefits often promoted by P2P platforms reduce honest reporting of taxable sharing economy income. Consistent with moral licensing theory, we find that earning income from a prosocial-oriented P2P platform liberates taxpayers to dishonestly report their sharing economy income, and this result is fully driven by taxpayers whose personal values are incongruent with values promoted by the P2P platform. Our paper contributes to the limited but growing research on the sharing economy and its implications for ethical decisions. It also adds to the moral licensing literature by identifying value congruency as an important
moderator for moral licensing effect.

Keywords: Sharing economy, Tax reporting honesty, Moral self-licensing, Prosocial, Value congruence

JEL Classification: M40