War Violence Exposure and Tax Compliance

59 Pages Posted: 12 Aug 2024

See all articles by Sergio Galletta

Sergio Galletta

ETH Zürich

Tommaso Giommoni

University of Amsterdam - Faculty of Economics and Business (FEB)

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Date Written: 2024

Abstract

We explore the effects of exposure to conflict and violence on civic compliance with the law. Using newly digitized historical records of income declarations and tax audits from post-World War I Italy, we show that losing a relative as a direct result of the war reduces tax compliance. To account for the potential endogeneity of the treatment, we use an instrumental variable strategy exploiting the exogenous allocation of soldiers to more/less dangerous military units. Our results show that the effect of reduced tax compliance remains consistent across different measures of compliance and is not due to economic reasons. We also find that this negative impact is lessened when the state acknowledges the sacrifice of the deceased, in communities that suffered many casualties, or in areas with high levels of social cooperation before the war. Overall, our findings suggest that war can erode social norms, leading to a lower willingness to contribute to public goods, such as paying taxes.

Suggested Citation

Galletta, Sergio and Giommoni, Tommaso, War Violence Exposure and Tax Compliance (2024). CESifo Working Paper No. 11230, Available at SSRN: https://ssrn.com/abstract=4922404

Sergio Galletta (Contact Author)

ETH Zürich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

Tommaso Giommoni

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

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