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Tax Compliance Under Different Institutional Settings in the EU: An Experimental Analysis

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  • Stefania Ottone
  • Ferruccio Ponzano
  • Giulia Andrighetto

Abstract

In this paper we study how people from different European countries would react, in terms of tax compliance, to institutional changes. We choose an experimental setting and we focus on two features of the tax system – efficiency and tax rate. We develop our analysis in three countries characterized by different systems: Italy, Sweden, UK. The main finding is that participants from different countries react with the same intensity to efficiency changes but not to increases in the tax rate. In all countries tax compliance decreases as tax rate increases, but the reaction is stronger in Italy and softer in UK. Policy implications – mostly focused on fiscal harmonization - follow.

Suggested Citation

  • Stefania Ottone & Ferruccio Ponzano & Giulia Andrighetto, 2015. "Tax Compliance Under Different Institutional Settings in the EU: An Experimental Analysis," Working Papers 307, University of Milano-Bicocca, Department of Economics, revised Aug 2015.
    • Handle: RePEc:mib:wpaper:307
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    References listed on IDEAS

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    More about this item

    Keywords

    tax compliance; fiscal harmonization; cross-country comparison; efficiency; tax rate;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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