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The Effect of Citizens’ Perception of Governance on Tax Compliance: A Cross-Country Analysis Study for 32 Sub-Saharan African Countries

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  • Enrico Nichelatti

    (University of Helsinki
    United Nations University – World Institute for Development and Economics Research)

  • Heikki Hiilamo

    (University of Helsinki)

Abstract

Raising domestic revenue still represents a priority for most Sub-Saharan African countries that continue to face high tax non-compliance. This research investigates whether there is a link between citizens’ perceptions of governance and individual tax compliance in SSA. We employ a logistic regression model by applying five levels of specifications and using round 7 of the Afrobarometer, which contains information on Africans’ views on democracy, governance, economic reform, civil society, and quality of life for 32 countries. The main results suggest that perceptions of governance and attitudes towards tax compliance are positively associated, and their impact differs by country. The study proposes a binary mediation analysis to investigate the direct and indirect effects of governance perception on individual tax compliance, with trust in institutions serving as a mediator. Our findings suggest that a negative perception of governance may influence the trust in institutions and affect willingness to pay taxes.

Suggested Citation

  • Enrico Nichelatti & Heikki Hiilamo, 2024. "The Effect of Citizens’ Perception of Governance on Tax Compliance: A Cross-Country Analysis Study for 32 Sub-Saharan African Countries," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(5), pages 1198-1226, October.
    • Handle: RePEc:pal:eurjdr:v:36:y:2024:i:5:d:10.1057_s41287-024-00631-2
    DOI: 10.1057/s41287-024-00631-2
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    More about this item

    Keywords

    Tax compliance; Perception of governance; Sub-Saharan Africa; Tax revenue; Regression analysis; Binary mediation analysis;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy

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