engleski

Determinants of tax morale in Croatia: an ordered logit mode

A lower tax morality leads to an increased readiness to become active in the unofficial economy and causes the lack of public revenues. The aim of this paper is to investigate determinants that shape tax morale of Croatian citizens, i.e. an individual’s intrinsic willingness to pay taxes. To analyse this, data are reported from 2, 000 face-to-face interviews conducted in Croatia in late 2015. In this dataset, there were a considerable number of missing values and answers (i.e., refusal and ‘don’t know’). To predict these values, a multiple imputation procedure is used. As the dependent variable is an ordinal variable with four categories (low, mid low, mid high and high tax morale), to analyse the determinants of tax morale we use an ordered logit model. The descriptive analysis illustrates that 52 percent of respondents reported that tax evasion is never justifiable (high level of tax morale), 26 percent of respondents have low tax morale, while 8 and 14 percent have mid low and mid high tax morale, respectively. Ordered logit analysis reveals that gender, age, financial situation, settlement size, region, participation in the informal economy on both the supply-and demand- side and expected size of sanctions when someone is engaged in informal activities have an impact on the tax morale. Furthermore, marginal effects show that those perceiving the expected sanctions for participation in informal activities as "normal tax or social security contributions due, plus a fine or prison" have by 6.3 percentage point higher probability of reporting the highest tax morale than others.

Croatia ; ordered logit model ; tax evasion ; tax morale

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