Threats in Latin American and Caribbean Countries: How Do Inequality and the Asymmetries of Rules Affect Tax Morale?

13 Pages Posted: 19 Oct 2009

See all articles by Natalia Melgar

Natalia Melgar

Universidad de la Republica

Juan Pablo Pagano

Universidad de la Republica - Departamento de Economía (dECON)

Mariana Gerstenbluth

Universidad de la Republica - Departamento de Economía

Maximo Rossi

Departamento de Economía, dECON; Universidad de la Republica - Department of Economics

Date Written: October 15, 2009

Abstract

Latin America is well known as the most inequitable region. As it is recognized, inequality and corruption perception weaken the way that political institutions works and the democratic system. Focusing on Latin American and Caribbean countries, we analyze what are the elements that shape tax morale. In particular, we analyze how the context influences on ethic decisions such as the predisposition to pay taxes. Our data source is the survey carried out in 2005 by Latinobarometro. In particular, our objective is to analyze how country performance is determining tax morale. To do so, we estimated four probit models including Gini index, Transparency International Corruption Perception Index and Gross Domestic Product per capita (GDPpc). As expected we found that some socio-demographic variables play a relevant role. Interestingly, we also found that, in this attitude, LAC countries do not register a gender bias. However, those are not our main contributions to the literature on the field. The most important results are linked with: 1) the level matters, GDPpc increases the probability that people have tax morale, 2) moreover, income distribution also influence on tax morale but in opposite direction and 3) corruption perception also reduces tax morale. Those results show that the quality of institutions matters and therefore, the way that democracy works play a relevant role.

Keywords: tax morale, corruption, inequality, democracy, microeconomic behavior

JEL Classification: H26, H73

Suggested Citation

Melgar, Natalia and Pagano, Juan Pablo and Gerstenbluth, Mariana and Rossi, Maximo, Threats in Latin American and Caribbean Countries: How Do Inequality and the Asymmetries of Rules Affect Tax Morale? (October 15, 2009). Available at SSRN: https://ssrn.com/abstract=1489393 or http://dx.doi.org/10.2139/ssrn.1489393

Natalia Melgar

Universidad de la Republica ( email )

Av. 18 de Julio
Montevideo, 1968
Uruguay

Juan Pablo Pagano

Universidad de la Republica - Departamento de Economía (dECON) ( email )

Caonstituyente 1502 Piso 6º
Montevideo, 11200
Uruguay

Mariana Gerstenbluth

Universidad de la Republica - Departamento de Economía ( email )

Facultad de Ciencias Sociales
Jose E. Rodo 1854
Montevideo 11200, 11200
Uruguay

Maximo Rossi (Contact Author)

Departamento de Economía, dECON ( email )

Facultad de Ciencias Sociales
Jose E. Rodo 1854
Montevideo 11200, 11200
Uruguay
59824106449 (Phone)
59824106450 (Fax)

HOME PAGE: http://Http://www.decon.edu.uy/~mito

Universidad de la Republica - Department of Economics ( email )

Constituyente 1502 Piso 6º
Montevideo, 11200
Uruguay
+598 2 4106449 (Phone)
+598 2 4106450 (Fax)

HOME PAGE: http://decon.edu.uy/~mito/pagina

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