Fairness and Tax Morale in Developing Countries

Area of Science:

• Behavioral Economics
• Public Finance
• Development Economics

Background:

• Understanding tax compliance is crucial for fiscal capacity in developing nations.
• Individual attitudes towards fairness significantly influence economic behaviors.
• Existing research often overlooks the nuanced relationship between fairness perceptions and tax morale.

Purpose of the Study:

• To investigate the link between fairness attitudes and tax compliance views in developing countries.
• To explore how perceptions of reciprocity and merit mediate this relationship.
• To examine the impact of inequality sensitivity on tax morale.

Main Methods:

• Utilized survey data from 18 major cities across Latin America.
• Employed statistical analysis to identify correlations and mediating factors.
• Focused on individual-level data to understand subjective attitudes.

Main Results:

• High sensitivity to fairness correlates with viewing tax payment as less of a civic duty and more justification for tax evasion.
• Reciprocity and merit perceptions act as mediators between fairness attitudes and tax compliance.
• Perceptions of income distribution and inequality significantly affect tax morale.

Conclusions:

• Fairness perceptions are a key determinant of tax compliance attitudes in developing economies.
• Interventions promoting a sense of fairness and reciprocity may enhance tax morale.
• Addressing inequality sensitivity is vital for strengthening fiscal capacity and fostering economic growth.