Testing Policy Options to fight Tax Evasion using behavioural Insights. Comparative results of behavioural experiments conducted in Moldova and France
Testing Policy Options to fight Tax Evasion using behavioural Insights. Comparative results of behavioural experiments conducted in Moldova and France

Author(s): Alexandru Bogdan ROMANIUC, Rustam Romaniuc, Vadim Gumene
Subject(s): Public Finances, Business Ethics, Corruption - Transparency - Anti-Corruption
Published by: EXPERT-GRUP Centrul Analitic Independent
Keywords: tax evation;
Summary/Abstract: Tax morale is defined as the moral obligation to pay taxes in the absence of any economic incentives. In any country, tax compliance is the result of both voluntary compliance and enforcement. Using economic experiments conducted in controlled laboratory conditions, we isolate the effect of tax morale from the effect of economic incentives. What is more, by comparing tax evasion rates using economic experiments in Moldova and in France, we study whether the relative importance of the shadow economy in Moldova compared to western countries is the result of a lower tax morale or is due to some other factors. The results from the laboratory experiments conducted with more than 400 participants indicate that tax morale is higher in Moldova than in France, holding the institutional quality constant. More specifically, assuming that citizens in both countries face good institutions, we find that the voluntary compliance with tax laws is higher in Moldova. Hence, using a new method of causal inference that enables us to measure tax morale, we find that the prevalence of the shadow economy is most likely due to weak institutions than to low intrinsic motivations to comply with tax laws in Moldova

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