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Economia Politica

, Volume 35, Issue 2, pp 367–402 | Cite as

Tax compliance under different institutional settings in Italy and Sweden: an experimental analysis

  • Stefania OttoneEmail author
  • Ferruccio Ponzano
  • Giulia Andrighetto
Article

Abstract

In this paper, we study how people from different countries would react to institutional changes in terms of tax compliance. We choose an experimental setting and focus on two features of the tax system: efficiency and tax rate. We develop our analysis in two countries characterized by high tax burdens, but with relevant differences in terms of tax evasion and the quality of public services: Italy and Sweden. The main result is that participants from both countries react similarly to changes in efficiency and tax rates: tax compliance rises when efficiency increases, and tax compliance falls when the tax rate increases. However, the absolute level of tax compliance depends on the population’s composition in terms of social preferences (prosocials and individualists). This may suggest that, even if cultural factors matter, institutional features—especially efficiency—play a relevant role in determining taxpayers’ behavior. In particular, if the level of efficiency is high, both Italians and Swedes tend to pay taxes when the tax burden is high. We conclude the paper by discussing related policy implications.

Keywords

Tax compliance Fiscal harmonization Cross-country comparison Cultural difference Efficiency 

JEL Classification

C9 D31 H26 

Notes

Acknowledgements

The research leading to these results has received funding from the European Research Council under the European Union’s Seventh Framework Programme (FP7/2007-2013)/ERC Grant Agreement n.(295675). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Supplementary material

40888_2018_93_MOESM1_ESM.docx (71 kb)
Supplementary material 1 (DOCX 71 kb)

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Economics, Management and StatisticsUniversity of Milano-BicoccaMilanItaly
  2. 2.Department of Law, Politics, Economics and Social SciencesUniversity of Eastern PiedmontAlessandriaItaly
  3. 3.Department of Social and Political SciencesEuropean University InstituteFiesoleItaly

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