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Fairness and Tax Morale in Developing Countries

Castañeda, Néstor; (2023) Fairness and Tax Morale in Developing Countries. Studies in Comparative International Development 10.1007/s12116-023-09394-z. (In press). Green open access

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Abstract

This paper investigates the relationship between individuals' attitudes towards fairness and their views about tax compliance in developing countries. It argues that individuals’ attitudes regarding fairness shape their views about paying taxes and their ethical stances regarding tax evasion. Using survey data for 18 major cities in Latin America, we find that individuals who are highly sensitive to fairness are less likely to consider paying taxes as a civic duty and more likely to justify tax evasion. These attitudes toward tax compliance are not inelastic. We also find evidence that individualst argues about reciprocity and merit mediate the effect of fairness on personal views about tax compliance. Finally, this paper shows that the heuristics people use to explain their position in the income distribution make them sensitive to inequality, and it affects their tax morale. These findings help us better understand the concept of reciprocity and provide valuable lessons on the urgent task of expanding fiscal capacity to promote economic growth and inequality in developing countries.

Type: Article
Title: Fairness and Tax Morale in Developing Countries
Open access status: An open access version is available from UCL Discovery
DOI: 10.1007/s12116-023-09394-z
Publisher version: https://doi.org/10.1007/s12116-023-09394-z
Language: English
Additional information: © 2023 Springer Nature. This article is licensed under a Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/).
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Institute of the Americas
URI: https://discovery.ucl.ac.uk/id/eprint/10165252
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