Cross-Culture Comparison of Tax Morale and Tax Compliance: Evidence from Costa Rica and Switzerland

By Torgler, Benno | International Journal of Comparative Sociology, February-May 2004 | Go to article overview

Cross-Culture Comparison of Tax Morale and Tax Compliance: Evidence from Costa Rica and Switzerland


Torgler, Benno, International Journal of Comparative Sociology


Introduction

Traditionally, tax compliance has been examined in terms of levels of enforcement (see Allingham and Sandmo 1972; Cowell 1990; Yitzhaki 1974). Several researchers argue, however, that tax compliance cannot be explained entirely by levels of enforcement (Alm, Sanchez, and De Juan 1995; Elffers 1991, 2000: Frey 1997; Graetz and Wilde 1985; Torgler 2002a). Countries set the levels of audit and penalty so low (see Andreoni, Erard, and Feinstein 1998) that most individuals would evade taxes, if they were rational, because it is unlikely that cheaters will be caught and penalized. Nevertheless, a high degree of compliance is observed. Furthermore, very large values for risk aversion are necessary to reach the tax compliance observed in many countries. In the face of these difficulties, researchers have suggested that further factors need to be analyzed. It is plausible that tax compliance is affected by other factors such as government services, trust in the institutions, perception of others' tax compliance, and social norms. Aim, Sanchez, and De Juan (1995), for example, compared identical tax compliance experiments conducted in Spain and the United States and found that subjects in the United States exhibited higher compliance than subjects in experiments in Spain, and attributed these differences to a higher "social norm" of compliance in the United States.

This paper focuses on the possible influence of social norms on tax compliance and tax morale using both field data and data obtained via laboratory experiments. Tax compliance is a complex behavioral issue and its investigation requires the use of a variety of methods and data sources as each instrument has advantages and shortcomings. Aim and Martinez-Vazquez (2001) have classified social norms into two categories: internal and external norms. Internal norms refer to "how the taxpayer judges his or her own compliance behavior in light of the individual's own feelings about what is proper, acceptable, or moral behavior" (Alm and Martinez-Vazquez 2001: 10). External norms refer to "how the taxpayer feels he or she is treated by government in such areas as the payment of taxes, the receipt of government services, or the responsiveness of government decisions" (Alm and Martinez-Vazquez 2001: 10). Based on this definition, we test the relationship between internal and external social norms and tax morale and tax compliance in Costa Rica and Switzerland. In this cross-cultural comparison, various factors are held constant, thus we are able to isolate possible cultural differences (see Torgler 2002a).

Costa Rica and Switzerland are chosen as case studies because both countries show almost identical values when comparing the importance of tax morale as measured by the World Values Survey (Switzerland 1989/90) and the Latinobarometro (Costa Rica 1998). Despite their different cultures and histories of compliance, both countries had the smallest "shadow economy" in their regions (i.e., Latin America and OECD; see Schneider and Enste 2000 and Schneider 2002).

In addition, these two countries were chosen for study because of the lack of comparative research on tax compliance between Europe and Latin America (see Andreoni, Erard, and Feinstein 1998).

Our examination begins with a brief overview of tax morale in Costa Rica and Switzerland. This overview sets the background for the presentation of experimental evidence and multivariate analysis, which reveals the shape of tax morale in each country. The final section summarizes the findings and offers some concluding remarks.

Tax Morale in Costa Rica and Switzerland

To understand differences in tax compliance and tax morale across cultures, we begin with a short overview of general taxation issues to understand possible institutional and cultural differences.

1. Costa Rica

Costa Rica is confronted with a government's deficit and long-term debt problems.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Cross-Culture Comparison of Tax Morale and Tax Compliance: Evidence from Costa Rica and Switzerland
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.