Tax morale and behaviour

  • Eileen McAuliffe

    Student thesis: Doctoral ThesisDoctor of Philosophy


    This thesis investigates the impact of factors affecting tax morale applying an ordered logit modelling technique across a range of variables, considered to influence tax morale. The scope of this thesis is limited to the exploration of the theoretical results through a behavioural lens suggesting those influences which are of significance. Future work may entail taking the results from this work further and producing a more practical tool from a behavioural economics perspective.

    The contributions made by this thesis to the knowledge of the subject are that it extends literature by relaxing the proportional odds assumption thereby revealing those variables that influence tax morale in a disproportionate manner. The literature hitherto, assumes linearity amongst variables. The thesi applies the model to a number of variables which take a broader perspective, investigating social, political and economic variables. The thesis also contributes to the literature as the methodology applied enables a distinction to be drawn in respect to developed and emerging economies, with the dataset drawing upon 12 countries (Australia, Brazil, China, India, Poland, Russia, Singapore, South Africa, Spain, Sweden, USA and Zimbabwe) responses over the period 2008-2012. This has resulted in the following findings.

    Firstly, it identifies the impact of tax policy effects over the period 2008-2012 on ordered logit coefficients, indicating which variables would be of significance and worthy of closer examination. The model further relaxed the proportional odds assumption to take account of responses which did not behave in alinear manner. This approach has not been developed in the literature thus far. This is examined through thematic groupings of variables including, socio-economic, institutional, political economy, state-building and religiosity and beliefs. The major contribution to governments worldwide is the ability to identify factors that influence tax policy and therefore develop legislation and strategies to encourage greater compliance without coercion.

    Secondly, the empirical results are situated in the context of behavioural models, thereby contributing to the growing body of behaviourally inspired research. The interpretation of results included testing the applicability of behavioural theories including Prospect Theory, Framing and LossAversion. The interpretation of the empirical results revealed behavioural interpretations do enhance the understanding of taxpayer motivations. Of note is the application of Prospect Theory which describes the potential for altering the tax payer perspective. The impact is further examined by comparing estimates by country by coefficient. The thematic country results produce differing statistically significant results with complex interactions of themes. This finding has potential implications policy setters worldwide and which will be the subject of continuing research.

    Thirdly, the outcomes derived were triangulated with the Corruption Perception Index (CPI) for robustness. This revealed the findings regarding a country’s level of tax morale were broadly consistent with that of the CPI’s. Additional descriptive statistics were calculated and whilst of little interest individually, do provide helpful background to the results presented. The main finding of the thesis, is that through the use of the Ordered Logit model applied, the influences which most strongly affect taxpayer behaviour can be identified. Through the development of behaviourally inspired strategies, focussed future taxpayer strategies can be developed thereby demonstrating the potentially important implications for tax compliance.
    Date of Award2017
    Original languageEnglish
    Awarding Institution
    • Coventry University
    SupervisorKarl Shutes (Supervisor)

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