TAX MORALE AND TAX COMPLIANCE IN FRANCE, GERMANY AND AUSTRIA V. Vlachos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki, Greece Monday,

Slides:



Advertisements
Similar presentations
Conference on Irish Economic Policy Union membership and the union wage Premium in Ireland Frank Walsh School of Economics University College Dublin
Advertisements

No. 1 Organizing Eldercare The Danish Case in a Comparative Perspective Morten Balle Hansen, Professor, PhD Department of Political Science, Aalborg University.
PSYCHOSOCIAL RISKS AND SUSTAINABLE DEVELOPMENT POLICIES Simionescu (Barbu) Irina Enescu George.
According to the Statistical Yearbook for 2010, in 2008/09 year, only 41% of the total number of children in Serbia, aged between 0 and 7 years, were enrolled.
Entrepreneurship in the EU: to wish and not to be Isabel Grilo and Jesús Maria Irigoyen.
Workplaces as key transformative learning spaces for facing socioeconomic crisis in post-Soviet contexts: The case of Latvia Elina Maslo, Genoveva Leví.
Compensation Compensation is the reward that individuals receive in exchange for performing tasks A major cost of doing business The chief reason people.
M IGRATION IN L ITHUANIA DEBATE ANSWERING THE CHALLENGES OF MIGRATION AND MULTICULTURALISM.
The Business Environment's perception of the economy Research Report Conducted for The Chamber of Commerce and Industry of Romania March 2015 S Study conducted.
Fabrizio Balassone, Daniele Franco, Alessandra Staderini (*) Tax Policy in EMU: a Preliminary Assessment (*) Banca d’Italia - Research Department.
Distributive Politics and Economic Growth Alberto Alesina and Dani Rodrik Economic Growth Spring Semester, 2009 Benedikte Fogh Larsen.
Comparative Evaluation of the Impact of e- participation in Local Climate Change Policy Programs The Effectiveness of E-Participation.
12 th Global Conference on Ageing June 11-13, 2014 The Economic Support System for Senior Citizens in India: Restating the Obvious K S James Institute.
Conditions of Work and Employment Branch (TRAVAIL) Wages and equitable growth 22 March 2013 Sangheon Lee Research and Policy Coordinator International.
Universities and Firms: A Comparative Analysis of the Interactions Between Market Process, Organizational Strategies and Governance Seminar, September.
2 Enter your Paper Title Here. Enter your Name Here. Enter Your Paper Title Here. Enter Your Name Here. ANALYSIS OF THE RELATIONSHIP BETWEEN JOB SATISFACTION.
INNOVATION AND ECONOMIC PERFORMANCE: AN ANALYSIS AT THE FIRM LEVEL IN LUXEMBOURG Vincent Dautel CEPS/INSTEAD Seminar “Firm Level innovation and the CIS.
Measuring population development from social cohesion perspective by women and men according to the Census data Urve Kask Statistics Estonia.
Customer : contractor : December, 2012 Sociologic Research on Awareness of Industrial Property Protection Possibilities.
The fiscal costs of ageing in the euro area: will the young have to pay the bill? Ad van Riet Head of the Fiscal Policies Division European Central Bank.
Copyright 2010, The World Bank Group. All Rights Reserved. Estimating informal production, part 2 1 Business statistics and registers.
Unemployment ● Causes of Unemployment ● The Phillips Curve ● Natural Rate of Unemployment ● Okun's Law.
Collecting and using data to calculate economic and social costs of Violence Against Women Geneva UNECE Work Session on Gender Statistics April
Macroeconomic Goals and Instruments
May 13, 2011 The gender pay gap in the European union: Quantitative and qualitative indicators DULBEA Department of Applied Economics of the Université.
Copyright 2010, The World Bank Group. All Rights Reserved. Estimating informal production, part 1 1 Business statistics and registers.
Study on social policy effects resulting from the scope of application of the European framework agreement on the prevention of health risks in the hairdressing.
Working Conditions, Health and Reward at Work of European Older Workers Thierry Debrand (*), Pascale Lengagne (**) (*) (**)
Measuring the Informal Economy in Latin America and the Caribbean Guillermo Vuletin.
5. Meeting: Informal Sector and Informal Practices in Everyday Life - The Informal Sector in Russia - The Meaning of Blat in the Soviet and Post-Soviet.
GENDER SPECIFICITY AND GENDER BUDGETING IN BULGARIA: SOCIO AND ECONOMIC ASPECTS GENDER SPECIFICITY AND GENDER BUDGETING IN BULGARIA: SOCIO AND ECONOMIC.
Pension Reform in a Mature Welfare State – Danish Experiences Lars Haagen Pedersen June 8, 2007.
Winners and Losers of the Income Dynamics in Germany between 1998 and 2005 The Impact of Social Class on Inequality Johannes Giesecke Roland Verwiebe University.
WYE City Group Meeting on Rural Development and Agricultural Household Income Rome, June 2009 Anna Szukielojc-Bienkunska, CSO Poland
Why Do Countries Use Capital Controls? Prepared by R. Barry Johnston and Natalia T. Tamirisa - December 1998 Presented by: Alyaa Ezzat.
Why Do Countries Use Capital Controls? INTERNATIONAL MONETARY FUND Why Do Countries Use Capital Controls? Prepared by R. Barry Johnston and Natalia T.
Michael J. Greenwood. Many, many papers and books have dealt with historical U.S. immigration from Europe. These contributions have made solid contributions.
Changes in the context of evaluation and assessment: the impact of the European Lifelong Learning strategy Romuald Normand, Institute of Education Lyon,
LOGO Mamdouh Abdel Aziz Refaiy Dr. Associate Professor, Business Administration Department, Faculty of Commerce, Ain Shams University, Cairo, Egypt. Evaluating.
1 Dilemmas in energy consumption, international trade and employment: Analysing the impact of embodied energy in traded goods on employment China University.
Informality Effects in the Economy of Albania in light of World’s Economic Crisis Working Group: BRUNILDA MUCA GALANTINA DORACI Advancing Socio-Economic.
CROSS-COUNTRY INCOME MOBILITY COMPARISONS UNDER PANEL ATTRITION: THE RELEVANCE OF WEIGHTING SCHEMES Luis Ayala (IEF, URJC) Carolina Navarro (UNED) Mercedes.
Hessian Ministry of Economics, Transport, Urban and Regional Development Different approaches of the State of Hessen to adapt labour and qualification.
November 2015  Prof. Dr. Friedrich Schneider, University of Linz / AUSTRIA Estimating the Size of the Shadow Economy in the Czech Republic and her Neighboring.
Advanced Macroeconomics Lecture 1. Macroeconomic Goals and Instruments.
Introduction to the UK Economy. What are the key objectives of macroeconomic policy? Price Stability (CPI Inflation of 2%) Growth of Real GDP (National.
SHADOW ECONOMY AND CORRUPTION IN GREECE: RECOMMENDATIONS FOR A MICROECONOMIC SURVEY V. Vlachos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki,
Renewable Policies & Challenges in Greece towards achieving its 2020 Energy Targets: a Questionnaire Survey Assoc. Prof. A. Bitzenis, Dr. P. Kontakos,
The Swedish Public-Private Mix in Pensions Eskil Wadensjö Swedish Institute for Social Research.
ENTREPRENEURSHIP AND TAX COMPLIANCE GAMES: EVIDENCE REGARDING ENTERPRISE BEHAVIOURAL DYNAMICS IN GREECE V. Vlachos, A. Bitzenis, P. Kontakos University.
Tax Morale and Compliance: Evidence from Small and Medium Enterprises in Greece Assoc. Prof. A. Bitzenis, Dr. P. Kontakos, Mr. P. Mitrakos University of.
A Theoretical analysis of the Social and Political Factors influencing Tax Compliance in Greece Mr. P. Mitrakos, Assoc. Prof. A. Bitzenis, Dr. P. Kontakos,
SHADOW ECONOMIC ACTIVITIES IN TURKEY: A REVIEW OF THE LITERATURE V. Vlachos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki, Greece Friday,
Income Inequality in Serbia Gorana Krstić, Faculty of Economics, University of Belgrade Conference: Understanding inequality in Southeast Europe: Taking.
SHADOW ECONOMIC ACTIVITIES IN ITALY, SPAIN & SWITZERLAND: A REVIEW OF THE LITERATURE V. Vlachos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki,
TACKLING UNDECLARED WORK IN GREECE A. Anagnostopoulos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki, Greece Wednesday, July 8, 11:00-13:15,
TAX MORALE AND COMPLIANCE IN GREECE: A REVIEW OF EMPIRICAL EVIDENCE A. Bitzenis, P. Kontakos, P. Mitrakos, I. Makedos University of Macedonia, Thessaloniki.
Preliminary results on a Questionnaire Survey regarding the Determinants of FDI in Turkey: the significance of shadow economy Aristidis Bitzenis, Ioannis.
Analysis of the Egyptian Labour Market with a Special Focus on MDG Employment Indicators Dr. Magued Osman.
Tax Morale in Greece Aristidis Bitzenis and Vasileios Vlachos University of Macedonia, Thessaloniki, Greece.
CORRUPTION AND POLITICAL INSTITUTIONS IN GREECE: PRELIMINARY SURVEY C. Kafteranis, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki, Greece.
TAX COMPLIANCE GAMES METHODS AND EVIDENCE FROM BEHAVIOURAL DYNAMICS IN GREECE V. Vlachos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki,
Empirical Estimates of Tax Compliance Behaviour from Micro- Level Data Vasileios Vlachos and Aristidis Bitzenis University of Macedonia, Thessaloniki,
ASPECTS OF THE GENDER INEQUALITY ISSUE IN KNOWLEDGE SOCIETY CAREERS IRIMIE SABINA MORARU ROLAND CIOCA LUCIAN BOATCA MARIA - ELENA UNIVERSITY OF PETROSANI.
Threats in Latin American and Caribbean countries: how do inequality and the asymmetries of rules affect tax morale? Mariana Gerstenblüth Natalia Melgar.
Gareth D. Myles Lynne Oats Jonathan Shaw July 2013.
Pantelis Pantelidis, University of Piraeus Dimitrios Kyrkilis, University of Macedonia Efthymios Nikolopoulos, University of Macedonia February 2011 The.
University of Sarajevo
  Performed by: Azrilian Anna year of study: group: IEe-16m
The Determinants of FDI Inflows to Greece
Presentation transcript:

TAX MORALE AND TAX COMPLIANCE IN FRANCE, GERMANY AND AUSTRIA V. Vlachos, A. Bitzenis, P. Kontakos University of Macedonia, Thessaloniki, Greece Monday, January 12, 11:00 AM-1:15 PM, Capri Room, Riviera Hotel, Las Vegas Session [7]: Contributing Firms, Occupational Burnout, Finance & Taxes 25 th B&ESI Conference 2015 Las Vegas, USA, January 10-13, 2015

2 Note: The current paper is presented under the auspices of the THALES Research Programme. THALES Programme has been co- financed by the European Union (European Social Fund - ESF) and Greek national funds through the Operational Program “Education and Lifelong Learning” of the National Strategic Reference Framework (NSRF).

Foreword to our Project Our aim is to research and measure the various aspects of shadow economy in Greece, including corruption, tax avoidance, social contribution avoidance, undeclared or illegal work, shelf consumption, illegal acts (black or underground economy). It will cover all economic agents in Greece, such as citizens and corporations (e.g. public and private individuals, companies and all professional categories, etc.) The research is also performed at sector levels, e.g. to identify the extent of tax evasion and corruption in the trading of oil in Greece. 3

Foreword to our Project (cont.) It does not aim to the precise percentage regarding the measurement of Greek shadow economy but aims to the qualitative analysis of questionnaire results and the comprehension of the problem. The implementation of our interviews, scientific games and economic experiments (tax compliance games) will involve at least 2,000 individuals and business owners (in majority small businesses). The project aspires to achieve numerous objectives, among which the development of a relevant theoretical background, and perform cross-country comparisons at regional level, but also with country groups with advanced taxation systems. 4

Agenda 1. Aim of the paper 2. Introduction 3. Stylized facts and scope of the study 4. France 5. Germany 6. Austria 7. Conclusions 5

1. Aim of the paper To identify which factors have an impact on tax morale and tax compliance in a selected sample of developed countries. Empirical evidence retrieved from other contemporary studies is utilized for this purpose, based on an extended literature review performed by the authors. The methodology used is that of descriptive analysis. Comparative profiles for each of the three countries are developed, with reference to various aspects of shadow economy, including corruption, tax avoidance, social contribution avoidance, undeclared or illegal work, shelf consumption, illegal acts (black or underground economy). Our ultimate aim is to use the three countries as benchmarks and input for future work in the case of Greece. 6

2. Introduction The report is structured as follows: The next section provides a synopsis of some stylized facts pertaining to the shadow economy, i.e. its synthesis and determinants, the methods to measure it, its impact on the official economy and its relation with corruption. The same section also provides information about the studies reviewed. Sections 4 to 6 refer to the countries of interest. Finally, section 7 summarizes the findings of the studies reviewed and puts forward some policy recommendations for transferring part of the shadow economy to the official economy. 7

3. Stylized facts and scope of the study A wide range of methods has been developed to evaluate and understand the dimensions and causes of shadow economy and corruption in the past three decades. These can be generally grouped under two approaches: indirect (macroeconomic) and direct (microeconomic) methods of measurement. Indirect methods are mainly intended at measuring the size of shadow economy. The real meaning of these methods is that they construe observable phenomena as signs of the unseen part of the economy. The most famous are discrepancy methods based on data comparisons, e.g. between labour force surveys and business statistics, as well as monetary methods (see e.g. Schneider and Enste, 2000). 8

3. Stylized facts and scope of the study (cont.) Direct methods refer to survey-based methods. They can measure not only the size but also the structure & motivations of the participants involved e.g. in undeclared work. Such methods have been applied in a number of countries in recent years. The commonly found macro estimations of the shadow economy is based on cross-country panel estimates of the multiple indicators multiple causes (MIMIC) approach that succeeded the currency demand approach (see the work of Schneider). The commonly explored determinants of the MIMIC approach are the tax burden (+), the self-employment quota (+), the unemployment rate (+), regulations (+), the quality of formal institutions measured (-) and the level of tax morale (-). With regard to the countries of interest to this report, the average estimates for the period are 15% of GDP for France, 16% for Germany & 9.8% for Austria (Schneider et al., 2010). 9

3. Stylized facts and scope of the study (cont.) The terms included in this report are shadow /informal /underground economy, which have the same meaning. The total hidden or total unobserved economy includes criminal activities. The formal /official economy are terms with the same meaning. Informal employment /labour and undeclared work have the same meaning and constitute part of the shadow economy. The shadow economy is more than tax evasion as it is the sum of all forms of tax non-compliance which are irrelevant to tax evasion, such as tax avoidance and concerns other activities generating concealed income such as bribery. Another issue discussed is the relation/effect of the shadow economy on the formal economy. The shadow economy may be pro-cyclical (i.e. follow) or counter-cyclical to the business/economic cycle. Schneider (2005) finds a negative correlation for developing countries & a positive for developed & transition countries. 10

4. France Analyses and estimates of the French shadow economy date back to the 1980s (De Grazia, 1983; Barthelemy, 1989). In a contemporary approach, Dell’Anno et al. (2007) employ the MIMIC technique to estimate the French shadow economy and compare it with those of Greece’s and Spain’s. The authors indicate that the French shadow economy follows a downward trend for the period , being approx. 8.6 percent of GDP in The rate of self-employment, unemployment and direct taxation (listed in terms of importance) are positively linked to the size of the shadow economy. Finally, the authors report a negative relationship between the shadow economy and GDP, which (along with the influence of unemployment) implies a substitution effect. 11

4. France (cont.) Based on experimental data, Fortin et al. (2007) explore tax evasion and social interactions. The authors report a fairness effect in terms of horizontal equity (i.e. in a group of individuals whose income is equal before tax, those with higher than mean group tax rate evade more in order to restore equity). With respect to the role of immigrants in the informal labour market, it appears that immigrants fit well to demands of modern firms for flexibility & docility (Samers, 1998) and attach more importance to work than French natives. Unlike the countries reviewed in the other sections, no study focusing exclusively on France explores the country’s determinants of corruption in the contemporary era. Maybe because there is no such interest in the literature, since according to the Corruption Perceptions Index (2013), France is placed on the 22nd position. 12

5. Germany Coming back to the work of Schneider (2009) and the questionnaire survey that he supervised in Germany (in 2003), several implications are made: – Firstly, the wage rate in the German shadow economy is on average 22 (minimum) to 40 (maximum) percent of the respective wage rate of the official economy. –Secondly, the demand for shadow economic activities has risen from 55 percent (of the total sample interviewed) in 1996 to 67 percent in 2003, while undertaking shadow economic activities remained stable (from 36 to 38 percent, respectively). –Thirdly, in 2003, 71 percent stated that without the shadow economy living standards will be reduced and only 3 percent stated that informal employment should be reported and prosecuted. Feld & Larsen (2005) report that age & marital status are the most important drivers for engaging in the shadow economy (i.e. younger individuals of years old and self-employed assisting spouses). 13

5. Germany (cont.) Pedersen (2003) reports on the proportion of the German population engaging in the shadow economy and gives a much lower rate of 10.4 percent. The author also reports on the factors driving towards this engagement, of which the most important is occupation, i.e. skilled men are significantly more likely to carry out black activities than male salaried employees (the same applies to women). Based on data obtained from a 2010 survey of German residents, Haigner et al. (2013) also explore the supply and demand for informal labour. They report that unemployment, in general, and dissatisfaction with one's relative standing in society and annoyance at government inefficiency, especially for males, are the main drivers for the supply of informal labour. Informal labour demand, however, is affected rather on flexibility (compared to official labour that has to conform to strict regulations) and the size of the tax burden. 14

6. Austria Schneider (2009) refers to estimates of the shadow economy from primary data on informal wage rates, which are approx. between 31% & 52% of the values estimated by the MIMIC approach. With respect to effects of the shadow economy on the official economy, Schneider (1999) indicates that in Germany and Austria, over 66% of the earnings in the shadow economy are immediately spent and boost the official economy. Based on sample of 252 fiscal officers, business students, business lawyers & entrepreneurs, Kirchler et al. (2003) explore the moral reception of the concepts of tax avoidance, tax evasion & tax flight. The results indicate that tax avoidance is perceived as legal & moral, and an intention to save taxes, characterized by cleverness & described as a good idea; tax evasion is perceived as illegal & immoral, and should be prosecuted; tax flight is perceived as legal but considered immoral. 15

6. Austria (cont.) Torgler and Schneider (2005) explore the significance of tax morale in Austria. They report that societal variables such as trust, national pride or religiosity have an impact on tax morale and emphasize on the phenomenon of conditional cooperation (i.e. when Austrians perceive that tax evasion is a common phenomenon, their intrinsic motivation to contribute to the society decreases). Finally, the authors assert that the Austrian tax morale is among the highest in Europe and that its marginal deterioration is related to the increase in the size of shadow economy. Turning to studies that focus on informal employment, Schneider (2011) argues that the most influential factors on the shadow economy and shadow labour force are tax policies and state regulation. Based on previous research and own calculations, Schneider (2011) estimates that in , the size of informal employment in Austria was approximately 16 percent of the official labour force and in Germany about 19 to 23 percent. 16

7. Conclusions The paper reviews the size and determinants of the shadow economy in three countries. With regard to estimations of the size, the findings of studies focusing on a single country differ from the generalized findings of the MIMIC approach (based on macro data). In particular, all primary data estimates of the shadow economy are smaller than the respective estimates generated by macro data. This is not only due to the intrinsic nature of direct survey approaches, which results to lower estimates of the shadow economy, but also because some of the estimates are based exclusively on informal wages and as such, they represent the size of informal labour (which is only a part of the shadow economy). Societal variables impact on tax morale. Moreover, demographic variables also have a role that is neglected by the MIMIC approach. 17

7. Conclusions (cont.) The relationship between the shadow economy and the formal economy arising by evidence from France indicates the existence of a substitution effect. The achievement of a transfer of a part of the shadow economy to the formal (instead of a reduction) is of extreme importance, since there is evidence from Austria and Germany that approx. 2/3 of informal income is immediately spent in the official economy and thus, in the case of a reduction apart of it would be lost. While deterrence policy is well-founded from a theoretical point of view, the empirical evidence on its success is rather weak. Other studies (e.g. Italian) indicate that the joint employment of incentives schemes and deterrence measures fosters compliance. 18