No. 16




Tax Morality as an Influence on Tax Obedience

19 December 2007


RiTo No. 16, 2007

  • Kerly Lillemets

    Ph.D. student in public administration, Tallinn University of Technology

Tax morals – in the sense of the readiness of an individual to pay taxes in the extent required – is an important foundation of tax obedience and is influenced by many factors.

Tax obedience has become an object of interest to economic psychology, as payment of taxes has created a social dilemma in society – whether to pay or not to pay – and for various reasons the selfish actions of individuals are favoured over the interest of society. The inability of classic economic theory to explain the level of tax obedience and its factors has created the need for analysis through special studies as to whether social norms and views influence people´s readiness to pay taxes, and what the effect of cultural norms and public administration is on people´s tax behaviour. The findings confirm that tax morality is affected by individuals´ views of the fairness of taxes, trust in the state, conscious use of tax revenue, and individual and cultural characteristics. Due to the abundance of factors that affect tax morality, an attempt to interpret the taxpayer´s economic behaviour can be confusing. One reason is undoubtedly the lack of a clear definition of the idea of tax morality and the heterogeneity of empirical studies. The question of tax obedience is just as old as taxes themselves and will remain an area of research as long as taxes exist.

Full article in Estonian