Effects of Culture on Tax Compliance: A Cross Check of Experimental and Survey Evidence

CREMA Working Paper No. 2004-13

43 Pages Posted: 7 Feb 2005

See all articles by Ronald C. Cummings

Ronald C. Cummings

Georgia State University - Department of Economics

Jorge Martinez-Vazquez

Georgia State University - Andrew Young School of Policy Studies

Michael McKee

affiliation not provided to SSRN

Benno Torgler

Yale University - Yale Center for International and Area Studies

Abstract

There is considerable evidence that enforcement efforts can increase tax compliance. However, there must be other forces at work because observed compliance levels cannot be fully explained by the level of enforcement actions typical of most tax authorities. Further, there are observed differences, not related to enforcement effort, in the levels of compliance across countries and cultures. To fully understand differences in compliance behavior across cultures one needs to understand differences in tax administration and citizen attitudes toward governments. The working hypothesis is that cross-cultural differences in behavior have foundations in these institutions. Tax compliance is a complex behavioral issue and its investigation requires the use of a variety of methods and data sources. Results from laboratory experiments conducted in different countries demonstrate that observed differences in tax compliance levels can be explained by differences in the fairness of tax administration, in the perceived fiscal exchange, and in the overall attitude towards the respective governments. These experimental results are shown to be robust by replicating them for the same countries using survey response measures of "tax morale."

Keywords: Tax compliance, tax evasion, tax morale, culture

JEL Classification: H26, C91

Suggested Citation

Cummings, Ronald G. and Martinez-Vazquez, Jorge and McKee, Michael and Torgler, Benno, Effects of Culture on Tax Compliance: A Cross Check of Experimental and Survey Evidence. CREMA Working Paper No. 2004-13, Available at SSRN: https://ssrn.com/abstract=661921 or http://dx.doi.org/10.2139/ssrn.661921

Ronald G. Cummings (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Jorge Martinez-Vazquez

Georgia State University - Andrew Young School of Policy Studies ( email )

University Plaza
PO Box 3992
Atlanta, GA 30302-3992
United States
404-651-3990 (Phone)
404-651-3996 (Fax)

Michael McKee

affiliation not provided to SSRN

Benno Torgler

Yale University - Yale Center for International and Area Studies ( email )

P.O. Box 208206
New Haven, CT 06520-8206
United States

HOME PAGE: http://www.crema-research.ch/fellowseiten/torgler.htm

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