Tax Evasion: Do Non-Economic Factors Matter?

Abstract

The aim of the study is to substantiate the relationship between the level of tax evasion and tax morality in Ukraine. An assessment of tax morality in the countries of the world is made and the interdependence between the level of tax morality and the scale of the shadow economy both in Ukraine and the world is proved. To achieve the set aim, the following scientific methods were used: the method of analysis and synthesis, methods of comparison, generalization, methods of statistical research (method of groupings, averages). The information base of the study was the results of the repeated sociological study World Values Survey. It is determined that the optimal level of tax burden, the excess of which can lead to the formation/growth of the shadow sector of the economy, also depends on the existing level of tax culture and tax morality in society. Based on the statistical analysis of the results of the World Values Survey, an increase in the level of tax morality over the world has been proven in dynamics. On average, more than 50% of respondents in each wave of the survey consider tax evasion to be a completely unacceptable and unjustified action (answer «1»). The phenomenon of «tax evasion» in most countries participating in the World Values Survey is permanently perceived by respondents as immoral, wrong, threatening the society, which proves the gravitation of the share of respondents with answers from «1» to «5» in all the studied waves up to 90%. It is proved that the volume of the shadow sector of the economy is inversely dependent on the level of tax morality in the country, so measures to form the necessary tax culture and increase the level of tax morality should be included in a comprehensive program for combating tax evasion. In particular, in Ukraine, the correlation coefficient between the share of respondents who condemn and do not justify any tax evasion (answers from «1» to «5» on a scale from «1» to «10») and the size of the shadow sector as a percentage of GDP in Ukraine amounted to –0.93. Prospects for further research elaborations in this direction are related to the application of the methodology of fiscal sociology to provide a more detailed assessment of the level of tax morality and the characterization of the tax culture that has formed in Ukraine.

Keywords

• tax
• tax evasion
• shadow economy
• tax culture
• tax morality.