Volume 38, Issue 1, 2008
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- Change of Guard for Economic Analysis and Policy (Uwe Dulleck, Benno Torgler and Clevo Wilson)
- Industrial Relations and Labour Market Reform:
Time to build on Proven Legacies
(John Buchanan, Brigid van Wanrooy, Sarah Oxenbridge and Michelle Jakubauskas)
- The Case for Minimal Regulation of the Labour Market
- Introduction to the Special Issue on Tax Compliance and Tax Policy
- Developing Tax Policy in a Complex and Changing World
(Simon James and Allison Edwards)
- Tax Effort in Developing Countries and High Income Countries:
The Impact of Corruption, Voice and Accountability
(Richard M. Bird, Jorge Martinez-Vazquez, Benno Torgler)
- Social Capital and Tax Morale in Spain (James Alm and Juan Luis Gomez)
- The Shadow Economy in Germany: A Blessing or a Curse for the Official Economy?
- Enforcing Tax Compliance: To Punish or Persuade? (Kristina Murphy)
- Procedural Fairness and Tax Compliance
(Martina Hartner, Silvia Rechberger,
Erich Kirchler, and Alfred Schabmann)
- Tax Culture:
A Basic Concept for Tax Politics
- Book Reviews
Change of Guard for Economic Analysis and Policy
Uwe Dulleck, Benno Torgler and Clevo Wilson
It is with great pleasure and enthusiasm that we took over the editorship of Economic Analysis and Policy (EAP) in 2008. EAP is the journal of the Economic Society of Australia (Queensland branch). In this note, we would like to highlight the changes that we have made to the journal. We hope and believe that these changes will enable EAP to move forward, increase its readership, move towards an impact factor and contribute to economic policy as well as the academic and industry discussions at local, national, and international levels.
In the following we present key changes and the rationale behind it. We begin with a brief history of EAP.
Industrial Relations and Labour Market Reform: Time to build on Proven Legacies
John Buchanan, Brigid van Wanrooy, Sarah Oxenbridge and Michelle Jakubauskas
The Case for Minimal Regulation of the Labour Market
Introduction to the Special Issue on Tax Compliance and Tax Policy
Developing Tax Policy in a Complex and Changing World
Simon James and Allison Edwards
This paper examines issues affecting the formulation of tax policy through to the development of actual proposals by tax policy-makers. This is done taking account of the possibility that too narrow an approach to this process can produce misleading conclusions and that proposals for tax reform may be inappropriate when the wider context of the tax system as a whole and the environment in which it has to operate are considered. Two issues are used to illustrate this situation – tax compliance and tax simplification. The paper concludes that in developing tax policy it is important to ensure that the wider context is taken into account and it also outlines a practical approach to achieve this aim.
Tax Effort in Developing Countries and High Income Countries: The Impact of Corruption, Voice and Accountability
Richard M. Bird, Jorge Martinez-Vazquez, Benno Torgler
In this paper we argue that a more legitimate and responsive state is an essential factor for a more adequate level of tax effort in developing countries and high income countries. While at first glance giving such advice to poor countries seeking to increase their tax ratios may not seem more helpful than telling them to find oil, it is presumably more feasible for people to improve their governing institutions than to rearrange nature’s bounty. Improving corruption, voice and accountability may not take longer nor be necessarily more difficult than changing the opportunities for tax handles and economic structure. The paper also shows that high income countries have also the potential of improving their tax performance through improving their institutions. The key contribution of this paper is to extend the conventional model of tax effort by showing that not only do supply factors matter, but that demand factors such as corruption, voice and accountability also determine tax effort to a significant extent.
Social Capital and Tax Morale in Spain
James Alm and Juan Luis Gomez
There is a growing literature on the individual determinants of the intrinsic motivation to pay taxes, what has been labeled ‘tax morale’. Most previous analyses of tax morale have utilized data from the World Values Survey and/or the European Values Survey. In this paper we use a unique data set from Spain’s Survey of Fiscal Policy; this data set also allows a much richer exploration of the role of various new measures of ‘social capital’ as determinants of tax morale than has been possible before, where social capital refers to the institutions, norms, and networks that promote cooperation and enable collective action. Our results indicate the important role of social capital measures as determinants of tax morale. In particular, we find that we find that an individual’s tax morale is significantly and positively associated with his or her perception of the benefits derived by society from the public delivery of goods and services. The perceived size of fiscal fraud also influences directly and negatively the intrinsic motivation to pay taxes.
The Shadow Economy in Germany: A Blessing or a Curse for the Official Economy?
This article provides an estimation of the size and development of the shadow economy of Germany, using various estimation procedures. The shadow economy is defined as market-bound production of goods and services which escape detection in the official estimates of GDP. An increased burden of taxation and social security payments, combined with intensive labour market regulation, insufficient quality of state institutions and low tax morale are the driving forces for the shadow economy. Moreover, the results of recent surveys for Germany demonstrate that the readiness to undertake illicit employment as well as its acceptance is high in Germany and other countries. Finally, conclusions are made about the effect of the shadow economy on the official one and incentive-oriented policy means are presented, so that the ‘black’ value added can be transformed into the official value added.
Enforcing Tax Compliance: To Punish or Persuade?
A long standing debate has existed between those who believe deterrence-based enforcement strategies work for gaining compliance from offenders and those who believe gentle persuasion and cooperation is more effective. This article is concerned with the issue of how to best deal with offenders so as to increase support for the law and lower the rate of subsequent re-offending. Using survey data from 652 taxpayers who have been through an enforcement experience with the Australian Taxation Office, the present study will show that depending on how an enforcement experience is perceived by offenders (as either stigmatic or reintegrative in nature) can influence the feelings of resentment they experience, but more importantly these feelings of resentment mediate the effect of punishment on subsequent compliance behaviour. In other words, it is these feelings of resentment in response to disapproval that go on to predict who will and will not comply with their subsequent obligations under the law.
Procedural Fairness and Tax Compliance
Martina Hartner, Silvia Rechberger, Erich Kirchler, and Alfred Schabmann
For taxpayers it is important to be treated in a procedurally fair and respectful manner, especially when being committed to pay their share of taxes and feeling identified with the nation. In case of perceived unfair treatment and processes of unfair decision making, taxpayers resist paying the whole amount of their taxes due. In this article the relationship between taxpayers’ treatment by tax authorities and non-compliance was further investigated. Based on the group engagement model (Tyler and Blader 2000, 2003), it was shown that procedural justice positively affects motivational postures of deference (Braithwaite 2003) and negatively affects motivational postures of defiance (Braithwaite 2003). Additionally, this relationship was partly mediated by national identity judgments. Regarding the influence on actual tax behavior, only a significant effect from motivational postures of defiance on non-compliance was obtained from the current data.
Tax Culture: A Basic Concept for Tax Politics
I have suggested not to limit tax-cultural considerations to the side of taxpayers, but to widen its understanding by using an embeddedness approach considering the history of taxation and by that means explicating national tax-cultural diversity (e.g. Nerré 2001b, 2002b, 2006a). In the course of continuing globalization two different kinds of disturbances of tax culture have been identified: tax culture shocks and tax culture lags. Both are due to ignorant and/or ethnocentric policy measures. While lags are caused almost inevitably during any transformation or reform process, shocks should be prevented by implementing appropriate tax political measures on an international (and national!) level in a tax-cultural conform way.
- The Black Swan by Nassim Nicholas Taleb
- Water Resource Economics by Ronald Griffin