Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale

27 Pages Posted: 11 May 2006

See all articles by Lars P. Feld

Lars P. Feld

Walter Eucken Institute; University of Freiburg - College of Economics and Behavioral Sciences; CESifo (Center for Economic Studies and Ifo Institute)

Bruno S. Frey

CREMA; University of Basel

Date Written: April 2006

Abstract

The traditional economic approach to tax evasion does not appear to be particularly successful in explaining the extent of tax compliance. We argue instead that a psychological tax contract which establishes a fiscal exchange between the state and the citizens shapes tax compliance to a large extent. In that respect, a case study of Switzerland is useful because the small size of the cantons and their direct democratic political systems procedurally establish a close exchange relationship between taxpayers and tax authorities. In this paper, evidence is discussed on how tax evasion and tax morale in Switzerland evolved over time. In addition, the impact of economic, legal, socio-demographic, psychological and institutional factors on Swiss tax evasion is discussed.

Keywords: Tax Evasion, Tax Morale, Deterrence, Responsive Regulation

JEL Classification: H26, H73, D73, D78

Suggested Citation

Feld, Lars P. and Frey, Bruno S., Tax Evasion in Switzerland: The Roles of Deterrence and Tax Morale (April 2006). Available at SSRN: https://ssrn.com/abstract=900351 or http://dx.doi.org/10.2139/ssrn.900351

Lars P. Feld

Walter Eucken Institute ( email )

Goethestrasse 10
Freiburg im Breisgau, Baden-W├╝rttemberg D-79100
Germany

University of Freiburg - College of Economics and Behavioral Sciences ( email )

Freiburg, D-79085
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Bruno S. Frey (Contact Author)

CREMA ( email )

S├╝dstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

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