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How do inequality affect tax morale in Latin America and Caribbean?

Author

Listed:
  • Mariana Gerstenbluth
  • Natalia Melgar
  • Juan Pablo Pagano
  • Maximo Rossi

Abstract

Latin America is well known as an inequitable region. As it is recognized, inequality and corruption perception weaken the way that political institutions works and the democratic system. Focusing on Latin American and Caribbean countries, this paper analyzes what are the elements shaping tax morale. In particular, how the context influences ethical grounds decisions such as the predisposition to pay taxes is analyzed, using the survey carried out in 2005 by Latinobarometro. The objective is to analyze how country performance determines tax morale. To do so, four probit models are estimated using Gini index, Transparency International Corruption Perception Index and Gross Domestic Product per capita (GDPpc) as explanatory variables. As expected we found that some socio-demographic variables play a relevant role. Interestingly, we also found that, in this attitude, LAC countries do not register a gender bias. However, those are not our main contributions to the literature on the field. The most important results are linked to: 1) the level matters, GDPpc increases the probability of people having tax morale, 2) moreover, income distribution also influence on tax morale but in opposite direction and 3) corruption perception also reduces tax morale. Those results show that the quality of institutions matters and therefore, the way that democracy works play a relevant role.ResumenComo afecta la desigualdad la moral fiscal en Latinoamérica y el CaribeLa literatura previa muestra que los más ricos tienen una probabilidad mayor de involucrarse en causas medioambientales. El aporte de este trabajo es analizar si hay un efecto conjunto entre el ingreso subjetivo y el desempeno del país de residencia sobre esta probabilidad. Para ello, se utiliza la quinta ola de la Encuesta Mundial de Valores. Se muestra que el ingreso subjetivo y las características del país de residencia son determinantes claves de estas actitudes así como lo es el efecto-interacción entre estas variables. Por lo tanto, las medidas que afectan las características de los países podrían tener un impacto relevante en la disposición de los individuos a participar.

Suggested Citation

  • Mariana Gerstenbluth & Natalia Melgar & Juan Pablo Pagano & Maximo Rossi, 2012. "How do inequality affect tax morale in Latin America and Caribbean?," Revista de Economía del Rosario, Universidad del Rosario, December.
    • Handle: RePEc:col:000151:010726
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    File URL: http://revistas.urosario.edu.co/index.php/economia/article/view/2819/2310
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    References listed on IDEAS

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    Cited by:

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    2. Gloria Alarcón García & José Daniel Buendía Azorín & María del Mar Sánchez Vega, 2016. "El rechazo al fraude fiscal en España: antes y después de la Gran crisis," Hacienda Pública Española / Review of Public Economics, IEF, vol. 218(3), pages 33-56, September.
    3. Alvaro Forteza & Cecilia Noboa, 2015. "Tolerance to Tax Evasion," Documentos de Trabajo (working papers) 1015, Department of Economics - dECON.
    4. Ciziceno, Marco & Pizzuto, Pietro, 2022. "Life satisfaction and tax morale: The role of trust in government and cultural orientation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    5. Masca, Simona-Gabriela & Chis, Diana-Maria, 2023. "Distributional implications of informal economy in the EU countries: Accounting for the spread of tax evasion benefits and cultural characteristics," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).

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    More about this item

    Keywords

    Tax morale; corruption; inequality; democracy; macroeconomic performance.Moral fiscal; corrupción; inequidad; democracia; desempeño macroeconómico;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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