Fiscal transparency and tax morale: is the relationship shaped by perceptions of government performance and corruption?

Abstract

The potential of fiscal transparency to improve tax morale (or the willingness to pay taxes) has been widely studied. However, the strength of the fiscal transparency-tax morale relationship may depend on how citizens perceive government performance and corruption. To probe these questions, this study draws on data from the World Values Survey Wave 7 (2017–2022), comprising 70,203 respondents from 48 countries, as well as various international governance indicators. The findings suggest that when individuals perceive more government corruption, fiscal transparency is associated with lower tax morale. In contrast, when individuals perceive better government performance, fiscal transparency has limited influence on tax morale. The results imply that the effect of fiscal transparency on tax morale is context dependent and, moreover, may backfire in countries with high levels of perceived corruption. Implications for policy and practice are discussed.

Points for practitioners

Citizens’ perceptions of government may influence their reactions to fiscal transparency. Efforts to boost willingness to pay taxes through greater fiscal transparency should also consider citizens’ views on government corruption.

Keywords

fiscal transparency perceptions of government perceived corruption perceived performance tax morale

Introduction

The degree to which citizens are intrinsically motivated to meet their tax obligations has been found to be contingent upon their understanding of public activities and services in relation to taxation (Andreoni et al., 1998; Daude and Melguizo, 2010; Daude et al., 2012; Torgler, 2004, 2005). As interest in the transparency for public resources and the value of public expenditures grows among citizens (Cucciniello et al., 2014; Jordan et al., 2016; Piotrowski and Van Ryzin, 2007), the provision of fiscal information is expected to have the potential to foster public comprehension of governmental expenditure and, in turn, impact citizens’ attitudes towards paying taxes (Al-Maghrebi et al., 2016; Alt and Lowry, 2010; Capasso et al., 2020). However, the effectiveness of fiscal transparency in improving tax morale remains uncertain.

Moreover, given that fiscal transparency indeed encompasses a mixture of fiscal information, citizens may resort to their existing beliefs about government as a heuristic tool to navigate through complex fiscal information. Prior research indicates that the same performance information can be judged differently according to the perceptions of the public sector (Hvidman and Andersen, 2016; Marvel, 2015a; van den Bekerom et al., 2020). Indeed, perceptions of corruption may trigger a cynical attitude toward government and reinforce beliefs that tax money is misappropriated (Berman, 1997; Cheeseman and Peiffer, 2023), while perceptions of government performance might lead to favorable attitude and the belief that paying taxes for beneficial services is a fair exchange (Torgler, 2004, 2005).

This study investigates the association between fiscal transparency and tax morale and, importantly, how this relationship may be shaped by perceptions of government performance and corruption. It employs multilevel models and data from the World Values Survey (hereafter WVS), alongside multiple international datasets that measure fiscal transparency and various covariates. This approach, which considers the combined influences of individual perceptions (micro-level) and broader contextual factors (country-level), facilitates a comprehensive understanding of government transparency (Porumbescu et al., 2022).

This research contributes to the current discourse on government transparency by presenting a fresh angle on how citizens respond to fiscal transparency. It unearths a crucial nuance: citizen reactions in the context of taxation are influenced not just by the mere availability of fiscal information, but also significantly by the citizens’ subjective views on the government itself. By incorporating variations in citizens’ perceptions of government performance and corruption across diverse levels of fiscal transparency, this study offers a multifaceted understanding of how fiscal information disclosure is linked to the willingness to pay taxes. It revitalizes our comprehension of public perceptions of government within the sphere of government transparency, spotlighting the unique and distinct roles played by negative and positive perceptions.

Theoretical framework

Fiscal transparency and tax morale

Fiscal transparency, also referred to as budgetary transparency, is described by Kopits and Craig (1998: 5) as “openness toward the public at large about government structure and functions, fiscal policy intentions, public sector accounts, and projections”. Fiscal transparency seeks to materialize openness that allows citizens and media actors to track the flow of government revenues and expenditures (Abushamsieh et al., 2014; Bastida et al., 2017). Tax morale, a term that encompasses “non-pecuniary motivations for tax compliance” (Luttmer and Singhal, 2014: 150), “intrinsic tax-compliance motives” (Doerrenberg and Peichl, 2018: 1) and “individuals’ moral attitude to paying taxes” (Ciziceno and Pizzuto, 2022: 2), is used in this article as a critical tax attitude variable that suggests the level of willingness to pay tax.

Scholars have proposed that fiscal transparency can serve as a means to foster positive attitudes towards tax compliance (e.g., Al-Maghrebi et al., 2016; Alt and Lowry, 2010; Capasso et al., 2020). Fiscal transparency is theorized to increase tax morale by making fiscal information available and accessible to the public so that taxpayers can better assess government budget revenues and expenditures (Capasso et al., 2020) and see the justification for taxes (Alt and Lowry, 2010). Here, the critical rationale for the positive link between fiscal transparency and tax morale is that fiscal information can demonstrate to taxpayers that their tax money is being used for beneficial public services and goods, thus convincing them of the value of their contribution. This supposition is exemplified by Manes-Rossi et al. (2019: 93) who contend that “whenever citizens are cognizant of the significance and practicality of public expenditure, they are better equipped to endorse financial durability through tax revenues”.

Nonetheless, concerns remain regarding the extent to which citizens can respond positively to fiscal transparency. Firstly, high fiscal transparency implies that citizens must handle a large quantity of complex government information. The technical nature of fiscal documents may constitute an intellectual obstacle for citizens to effectively respond to the disclosed fiscal information (Heald, 2012; Meijer et al., 2015). More importantly, fiscal transparency is a complex package of information, encompassing both positive and negative aspects of fiscal performance. It does not exclusively highlight instances of commendable fiscal achievement or optimal utilization of tax money, but also reveals the shortcomings and challenges in financial governance. Deviations from expected fiscal outcomes tend to be met with a great deal of disapproval from the public (Lowry et al., 1998). As such, with greater fiscal transparency, citizens are equally likely to detect mismanagement, faults, or negative fiscal outcomes. Moreover, intermediaries such as the media, investigative journalists, and watchdog organizations, who usually make fiscal information more accessible and understandable to the public, could alert citizens to instances of negative fiscal performance (Soroka and McAdams, 2015). These actors are prone to focus on accountability by highlighting cases of misconduct, misappropriation, and financial irregularities (Bauhr and Grimes, 2017; Garrett et al., 2006). Some evidence suggests that increased transparency in fiscal institutions may result in an accentuated focus on negative economic and fiscal outcomes, consequently triggering adverse responses from citizens (Alt et al., 2002). In light of these considerations, this study hypothesizes that:

H1: Greater fiscal transparency is associated with higher tax morale.

Perceptions of performance and corruption

If the primary motive for taxpayers to pay taxes is to seek a fair exchange for government-provided public services and goods (Webber and Wildavsky, 1986), then it is likely that perceptions of government performance and corruption will play a crucial role in shaping their taxpaying attitudes. Positive perceptions of government performance may lead to higher tax morale, as citizens may anticipate fair and even greater returns relative to their tax contribution. Consistent with this line of reasoning, some evidence suggests that citizens who evaluate government performance more positively are more willing to pay taxes (Daude et al., 2012; Glaser and Hildreth, 1999). Conversely, perceptions of government corruption can be expected to reduce tax morale, as citizens are more likely to suspect that tax money is being misused to benefit special interests instead of providing public services (Cheeseman and Peiffer, 2023). The suspicion of unfair and unethical use of public resources may lead citizens to question why they should pay taxes if public officials are misusing their funds (Levi and Sacks, 2009). Therefore, this study hypothesizes that:

H2a: Higher perceived performance in the governments is associated with higher tax morale.

H2b: Higher perceived corruption in the governments is associated with lower tax morale.

Furthermore, as previously noted, fiscal transparency encompasses a complex amalgamation of information, some positive and some negative. This implies that public perceptions of government might play a significant role in responding to fiscal transparency. This is due to the individual's tendency to favor information that supports their existing perceptions and avoid information that contradicts their beliefs (Festinger, 1957; Nickerson, 1998). People typically seek information that aligns with their attitudes (Frey, 1986; Knobloch-Westerwick et al., 2017), and they often process information in a manner that favors their existing attitudes (Taber and Lodge, 2006). This inclination towards seeking congruity is found to be even more pronounced in people with stronger attitudes (Brannon et al., 2007; Taber and Lodge, 2006), especially in individuals with negative views on politics (Van der Meer et al., 2020).

Empirically, there is evidence to suggest that individuals with varying levels of trust in government and those with different perceptions of government corruption respond differently to government transparency (Bauhr and Grimes, 2014; Wu et al., 2017). For instance, Wu et al. (2017) discovered that citizens with low trust in government evaluate public service performance differently in response to government transparency than those with high trust. Similarly, Bauhr and Grimes (2014) discovered that in countries where governments are perceived as highly corrupt, the public's response to greater government transparency leads to a decrease in social accountability. Importantly, predispositions towards government are often highly resistant to change, even when faced with new information (Grimmelikhuijsen, 2012; Marvel, 2015b). Therefore, this study hypothesizes that:

H3a: Perceived performance moderates the relationship between fiscal transparency and tax morale such that higher levels of perceived performance will lead to a more positive transparency–tax morale relationship compared with lower values of perceived performance.

H3b: Perceived corruption moderates the relationship between fiscal transparency and tax morale such that higher levels of perceived corruption will lead to a more negative transparency–tax morale relationship compared with lower values of perceived corruption.

Data and method

Data

This study utilizes data from the WVS Wave 7 (Haerpfer et al., 2022), supplemented by country-level data from the Open Budget Index (OBI), the World Bank, and Freedom House. The WVS Wave 7 surveyed 64 countries with more than 80,000 respondents from 2017 to 2022. Following the combination of multiple international datasets and the removal of missing values in the focal variables (perceived corruption, perceived performance, tax morale, and fiscal transparency), this study has a working sample of 70,203 respondents from 48 countries.

Measurement

All variables and their definitions are listed in Table 1, and descriptive statistics for all measures are provided in Table 2. Details on the country sample are provided in Supplemental Appendix A.

Table 1.

Variable definition.

Variable	Source	Definition
Respondent-level outcome
Tax morale	WVS (Q180)	“Whether you think it can always be justified, never be justified, or something in between: cheating on taxes if you have a chance?”: 1 = always justifiable ∼ 10 = never justifiable (reversed from original response format)
Respondent-level regressors
Perceived performance	WVS (Q71)	“I am going to name a number of organizations. For each one, could you tell me how much confidence you have in them: is it a great deal of confidence, quite a lot of confidence, not very much confidence or none at all? The government”: 1 = none at all ∼ 4 = a great deal (reversed from original response format)
Perceived corruption	WVS (Q113 Q115 Q116)	“Among the following groups of people, how many do you believe are involved in corruption? Tell me for each group if you believe it is none of them, few of them, most of them or all of them? State authorities (Q113), Local authorities (Q115), Civil service providers (police, judiciary, civil servants, doctors, teachers) (Q116)”: 1 = none of them ∼ 4 = all of them
Age	WVS (Q262)	Respondent's age in years.
Sex	WVS (Q260)	Respondent is male: 0 = no; 1 = yes.
Marital status	WVS (Q273)	Respondent is married: 0 = no (divorced, separated, widowed, single); 1 = yes.
Education	WVS (Q275)	Highest level of education: 0 = Early childhood education/no education; 1 = Primary education; 2 = Lower secondary education; 3 = Upper secondary education; 4 = Post-secondary non-tertiary education; 5 = Short-cycle tertiary education; 6 = Bachelor or equivalent; 7 = Master or equivalent; 8 = Doctoral or equivalent
Employment status	WVS (Q279)	Respondent is employed: 0 = no (unemployed, retired, student); 1 = Yes (full time, part time, self-employed)
Income	WVS (Q288R)	Respondent's income level: 1 = Low; 2 = medium; 3 = high
Country-level regressors
Fiscal transparency	IBP	2017–2021 Open Budget Index: 0 = min to 100 = max
Global freedom status	Freedom House	2020 global freedom status: 0 = min to 100 = max
GDP per capita	World Bank	2019 GDP per capita, PPP (current international $)
Population	World Bank	2019 total population
Direct tax burden	World Bank	2017–2021 taxes on income, profits and capital gains (% of revenue)
Tax revenue	World Bank	2017–2021 tax revenue (% of GDP)

Note: If the source is the WVS, the variable name is provided in parentheses.

WVS = World Values Survey, Wave 7; IBP = International Budget Partnership.

Table 2.

Sample description.

Variables	Valid N	Mean (SD)	Min, Max
Individual-level variables
Tax morale	70,203	8.67 (2.22)	1, 10
Perceived performance	70,203	2.34 (0.99)	1, 4
Perceived corruption	70,203	2.53 (0.69)	1, 4
Gender: male	70,131	48%	0, 1
Marital status: married	69,877	64%	0, 1
Employment status: employed	69,470	60%	0, 1
Age	69,997	42.62 (16.39)	16, 103
Education^a	69,598	3.46 (2.01)	0, 8
Income^a	68,809	1.84 (0.58)	1, 3
Country-level variables
Open Budget Index	48	51.96 (21.46)	0, 87
Global freedom status	48	57.72 (26.21)	10, 98
GDP per capita (thousand)^b	48	20.69 (16.55)	0, 65.28
Population (million)^b	48	94.34 (206.32)	2.95, 1397.71
Tax burden	41	27.45 (14.22)	2.34, 64.81
Tax revenue	41	14.37 (5.29)	2.01, 27.98

Note: Means of binary variables are shown as percentages.

Education and Income as controls are treated as continuous variables rather than ordinal variables for easier interpretation.

Descriptives for an untransformed variable are provided, but a log-transformed variable is included in the regression model.

Tax morale

This was measured by justification for tax cheating. This item bears the closest resemblance to tax morale and has been used extensively as a proxy in tax research to capture taxpaying attitudes (e.g., Ciziceno and Pizzuto, 2022; Doerrenberg and Peichl, 2018; Luttmer and Singhal, 2014; Torgler, 2004, 2005). For the purpose of analysis, the order of scale from 1 to 10 was reversed so that higher values indicate higher willingness to pay taxes.

Perceived performance

Confidence in government is used as a proxy to represent the level of perceived performance. Prior research suggests confidence in government in general reflects overall evaluation of contemporary social and political conditions (Cook and Gronke, 2005) and can closely align with the subjective evaluation of government performance (Goldfinch et al., 2022; Morgeson and Petrescu, 2011; Zhang et al., 2022). In order to facilitate intuitive interpretation, the order of the scale was reversed, so that higher values signify higher perceived performance.

Perceived corruption

To reflect the generalized perception of corruption in the government, this study uses three items asking respondents about their perceptions of the degree to which state authorities, local authorities, and civil service providers were involved in corruption. An index variable was created by taking the average of the three items. Cronbach's alpha was 0.82, suggesting an excellent level of reliability. Higher values indicate higher perceived levels of corruption in the government.

Fiscal transparency

The OBI, the budget transparency scores from the International Budget Partnership, was employed as the measure of fiscal transparency at the country level. This transparency score was calculated according to the public availability, timeliness, and completeness of the eight key documents that all countries ought to publish: the pre-budget statement, executive budget proposal, enacted budget, citizens’ budget, in-year reports, mid-year review, year-end report, and audit report (also see Seifert et al. (2013) for OBI methodology). The OBI has been extensively employed in research concerning fiscal transparency, providing a reliable measure of the extent to which governments reveal financial data (De Renzio and Masud, 2011). An average OBI score was computed based on the data from 2017, 2019, and 2021, aligning with the period of the WVS wave 7. Higher fiscal transparency scores on the OBI represent greater disclosure of fiscal information to the populace.

Control variables

This study employed a multilevel design that controlled for respondent-level variables, including age, sex, marital status, education, employment status, and income. At the country level, important governance indicators were controlled, encompassing global freedom status, GDP per capita, population, direct tax burden, and tax revenues. Prior research emphasizes the necessity to control these country-level variables (Bauhr and Grimes, 2014; Capasso et al., 2020; Peiffer and Alvarez, 2016). GDP per capita and population were specifically included to account for and manage the most significant variation among countries. The Global Freedom Status Index was also employed as a control variable to address the variance in information flow between democratic and non-democratic nations (Lord, 2006). Although the Press Freedom Index from Freedom House is often used to account for the influences of the media, journalists, and watchdog organizations, it is not included in the preferred model due to its strong correlation with the Global Freedom Status Index (r = 0.95). Such a high correlation could introduce collinearity, potentially skewing the model results. However, the strong correlation also indicates that incorporating the Global Freedom Status Index should substantially absorb the variations of media influences across countries. The inclusion of tax burden and tax revenues as covariates was due to their potential impact on tax morale. To manage missing data in tax burden and revenues for some years and countries, the average values from 2017 to 2021 were computed to provide a representative measure.

Analytic approach

This article considers tax morale to be a result of combined influences emanating from citizen perception (individual forces) and fiscal transparency (situational influences). A two-level multilevel regression was estimated to test research hypotheses. The model was parameterized with respondents at Level 1 and countries at Level 2. Following the advice of Heisig and Schaeffer (2019), this study estimated multilevel regression models involving cross-level interactions with a random effect for the slope of perceived corruption to avoid a severely anti-conservative statistical inference. This model allows nonzero correlation between random effect for the intercept and random effect for the slope of perceived corruption because bayesian information criterion and likelihood ratio tests suggest that this specification is preferred.

For missing values in any given control variables, best-guess imputation was implemented to avoid deterioration of the sample size (also see King et al., 2001). Respondents with missing values were flagged with a dummy variable for each such regressor. These were then included as additional control variables in order to adjust coefficients for peculiar missingness patterns. The same procedure was used for country-level control variables.

Results

Table 3 presents the results from multilevel regression models. Model 1 is a standard multilevel model with no interactions. The coefficient of the OBI is statistically insignificant (p > 0.1), indicating that fiscal transparency is unrelated to tax morale, though the sign is negative. Figure 1 provides complementary visualization, displaying a scatterplot of the mean of tax morale against fiscal transparency by country with a fit line. The results of Model 1 are corroborated by the visualization of Figure 1, which suggests a slightly negative but relatively smooth relationship between the mean of tax morale and fiscal transparency. Consequently, the results provide counter-evidence to H1.

Table 3.

Multilevel linear regression model of tax morale.

	Model 1		Model 2		Model 3
	b	se	b	se	b	se
Individual-level variables
Perceived performance	0.021**	(0.010)	0.021**	(0.010)	−0.059**	(0.026)
Perceived corruption	−0.061***	(0.014)	−0.06***	(0.014)	0.209**	(0.099)
Gender: male	−0.148***	(0.016)	−0.148***	(0.016)	−0.152***	(0.016)
Marital status: married	0.046***	(0.018)	0.046***	(0.018)	0.044**	(0.018)
Employment status: employed	−0.075***	(0.018)	−0.075***	(0.018)	−0.067***	(0.018)
Age	0.010***	(0.001)	0.010***	(0.001)	0.01***	(0.001)
Education	0.056***	(0.005)	0.056***	(0.005)	0.051***	(0.005)
Income	−0.091***	(0.015)	−0.091***	(0.015)	−0.099***	(0.015)
Country-level variables
Open Budget Index	−0.01	(0.007)	−0.01	(0.006)	−0.001	(0.008)
Global freedom status	0.004	(0.005)	0.002	(0.006)	0.003	(0.006)
GDP per capita (logged)	−0.062	(0.155)	−0.193	(0.17)	−0.025	(0.168)
Population (logged)	0.1	(0.083)	0.107	(0.085)	0.112	(0.092)
Tax revenue	0.012	(0.026)	0.009	(0.025)	0.017	(0.026)
Direct tax burden	0.005	(0.008)	0.002	(0.008)	0.003	(0.008)
Perceived performance			−0.388	(0.312)
Perceived corruption			−0.794*	(0.461)
Cross-level interaction
Perceived performance* Open Budget Index					0.001***	(0.000)
Perceived corruption* Open Budget Index					−0.005***	(0.002)

*p < 0.1; **p < 0.05; ***p < 0.01 (two-tailed tests).

Note: N = 70,203 respondents from 48 countries. Included but not shown are an intercept and dummy variables for regressors with missing data. In Model 2, the coefficients for the level-1 regressors are within-country effects, while the coefficients for their level-2 counterparts are between-country effects.

In Model 1, the coefficient of perceived performance is positive with statistical significance (p < 0.05), showing that higher perceived government performance is positively associated with higher tax morale. Consequently, support was found for H2a. Further, the coefficient of perceived corruption is negative and highly statistically significant (p < 0.01), suggesting that citizens who perceive a higher level of corruption within the government demonstrate less willingness to pay taxes, thereby providing evidence in favor of H2b.

In order to gain a more detailed understanding of the contextual impact on individual attitudes, Model 2 was used to compute the within-country and between-country coefficients. In Model 2, country-level means of the perceived performance and corruption are included to make internal Level-2 regressors. Because Level-1 regressors stay in their original metric, the coefficient of individual-level perceived performance and corruption demonstrated the deviation of individuals’ values from their country mean. In other words, it illustrated the correlation between perceptions of government and tax morale within a country. The statistically significant positive coefficient of perceived performance implies that citizens who view government performance as being greater than the national average have a higher tax morale (p < 0.05). Meanwhile, the negative, significant value of perceived corruption implies that those who perceive higher levels of corruption than the national average have a lower tax morale (p < 0.01). The coefficients of country-level perceived performance and corruption, on the other hand, denote the net of compositional differences across countries. The insignificant result of country-level perceived performance at a 95% significance level indicates that countries whose citizens generally perceive higher performance do not necessarily have higher tax morale, on average. In other words, the contextual effect of perceived performance has little influence on willingness to pay taxes. Additionally, the negative, statistically significant result of country-level perceived corruption suggests that countries with a stronger collective perception of corruption have a lower tax morale. All in all, Model 2 provides some support for H2a and evident support for H2b.

Model 3 includes cross-level interaction terms to examine H3a and H3b. The coefficient of cross-level interaction between perceived performance and fiscal transparency represents a contrast in the slope of fiscal transparency and tax morale among different levels of perceived performance. Similarly, the coefficient of cross-level interaction between perceived corruption and fiscal transparency represents a contrast in the slope of fiscal transparency and tax morale among different levels of perceived corruption. Since focusing on the statistical significance of coefficients of interaction terms could potentially lead to incorrect inference, plotting how the marginal effect of predictors on outcome variables varies with the value of moderators can increase interpretability and aid in understanding the substantive implications (Berry et al., 2012; Brambor et al., 2006). The Johnson–Neyman (JN) technique is also utilized to identify the statistically significant region for interaction terms (Hayes, 2018).

Figure 2 shows the marginal effect of fiscal transparency on tax morale conditioning at different levels of perceived performance/corruption. In terms of the moderating role of perceived performance, it suggests that the relationship between fiscal transparency and tax morale remains statistically flat across all observed levels of perceived performance, although there is a small upward trend as perceived performance increases. The JN technique further suggests that such a positive relationship becomes statistically significant only when the value of perceived performance surpasses 13.49, although the observed range for perceived performance is merely between 1 and 4. Overall, this result lends limited support to H3a.

Furthermore, the relationship between fiscal transparency and tax morale is not statistically different from zero at the 95% significance level for low to modest levels of perceived corruption. However, the relationship becomes significantly negative at a high level of perceived corruption, indicating that for individuals who perceive high levels of corruption in the government, fiscal transparency is inversely associated with tax morale. Specifically, the JN technique indicates that when the value of perceived corruption is larger than 2.93, the negative slope of fiscal transparency becomes statistically significant. Those results provide empirical support for H3b.

Since the symmetrical property of interaction terms can be further leveraged to provide supplementary analysis for interactive hypotheses (Kam and Franzese, 2007), Figure 3 plots predictive margins of perceived performance/perceived corruption conditioned on fiscal transparency quantiles, holding all other regressors constant at their observed values. The results of Figure 3 indicate that a negative correlation exists between the perception of corruption in government and tax morale, given sufficient fiscal transparency. Specifically, this relationship is flat in the bottom quartile of fiscal transparency, but becomes negative in the higher quartiles. In contrast, the perceived performance-tax morale link is nearly unaffected by fiscal transparency, remaining consistent across all quartiles. These findings suggest that, when sufficient fiscal transparency is available, individuals who perceive corruption in government tend to display lower tax morale. Conversely, the connection between the perception of government performance and tax morale seems to largely decouple, remaining relatively flat even in the presence of substantial fiscal transparency.

A robustness check utilizing the subcomponents of the OBI indicates that the coefficients of variables of interest related to the research hypotheses largely retain the same direction and similar statistical significance (see Supplemental Appendix B). The primary findings also remain consistent when an alternate media freedom indicator is accounted for in the model (see Supplemental Appendix C).

Discussion and implications

Prior to discussing the research findings, it is important to acknowledge several limitations of this study. Firstly, the use of cross-sectional data with an observational nature limits the ability to draw robust causal conclusions. For instance, it is possible that certain omitted variables might cause both fiscal transparency and tax morale to vary, such as political competition (Schnell, 2018) or cost of sovereign debt (Bastida et al., 2017). From this perspective, this study considers contextual factors only marginally and as a whole. Despite the fact that relevant individual-level variables are controlled in the model, those individual variables are not discussed, and further research at the country level is needed to better understand the influence of these variables and identify possible measures to increase citizens’ attention to government performance and corruption. Therefore, the study provides a general overview of the issue, but cannot delve into the individual determinants of fiscal morale. Given this limitation, the language used in this study is descriptive of associations rather than causality.

Additionally, the current study relies on the felt justification for tax cheating as a proxy for tax morale, due to the questionnaire design of the WVS. While this approach has been widely used in previous research, there are subtle differences between the two concepts. Similarly, caution should be applied when using confidence in government as a proxy for perceived performance, even though a good body of literature has highlighted a fairly strong positive correlation between trust in government and subjective evaluations of government performance. Furthermore, it is assumed that generalized perceptions of government are difficult to change in response to new information. Nonetheless, the implementation of increased transparency could potentially prompt some shift in these generalized views on government. It should be noted, however, that any such changes are likely to be slight in scale (Chen and Ganapati, 2023; Grimmelikhuijsen, 2012; Porumbescu, 2017). Considering the limitations of the present study, the subsequent discussion delves into the research findings and their implications.

The present study uncovers limited evidence in support of the notion that fiscal transparency can enhance tax morale. This finding resonates with previous reservations regarding the positive reaction of the public to fiscal transparency (Alt et al., 2002; Heald, 2012; Meijer et al., 2015). While the relationship between fiscal transparency and tax morale is not statistically significant, the slightly negative trend observed suggests that fiscal transparency, as a tool for promoting government accountability, could potentially allow citizens to more easily detect instances of public fund misappropriation, waste, or inefficiency. From this perspective, fiscal transparency may serve the primary objective of providing taxpayers with more comprehensive information to ensure that the government fulfills its fiduciary duty (Mehrotra, 2015; Zelenak, 2013).

Curiously, the findings of this study contradict those of Capasso et al. (2020), who documented evidence that fiscal transparency is positively associated with tax morale using the 2003–2013 WVS data and the Government Finance Statistics (GFS) index. The discrepancies in findings may reflect differences in citizen values and attitudes in the latest WVS 7 wave compared with previous surveys. In addition, the inconsistent findings could be attributed to differences in fiscal transparency measurements and the varying samples of countries used in the prior study.

Regarding the role of government perceptions, the current results indicate that these perceptions indeed play crucial roles in shaping tax morale. The results suggest that perceptions of government performance are associated with higher tax morale, while perceptions of corruption correlate with lower tax morale. Interestingly, and somewhat surprisingly, the perception of corruption plays a different role from the perception of performance in terms of response to fiscal transparency. The findings suggest that reluctance to pay taxes, driven by fiscal information, is more evident in individuals who hold stronger perceptions of corruption. On the contrary, little increase in willingness to pay taxes, driven by fiscal information, is observed in those with stronger perceptions of government performance. In nations with greater fiscal transparency, citizens perceiving high levels of corruption are notably less willing to pay taxes than those perceiving low levels of corruption. However, individuals perceiving high levels of government performance do not respond positively to fiscal transparency to the same degree.

Collectively, the results suggest that negative perceptions of government are more significant than positive ones in shaping public responses to fiscal transparency in the context of taxation. It seems that a negative perception of corruption leads individuals to focus on negativity in fiscal information, while positive perceptions of government performance have a limited influence on steering individuals towards positivity. The observed pattern implies that individuals who perceive an unfair exchange regarding their taxes are more likely to favor negative information to validate their suspicions of corruption. Conversely, those who anticipate a fair exchange might not be as motivated to embrace positive information to confirm their expectations of effective government performance.

This study adds a fresh perspective to government transparency research. Previous discussions concerning the potential of fiscal transparency largely focused on the availability of fiscal information, oscillating between the positive information that conveys the value of taxpayers’ money and the negative information that reveals unfavorable fiscal outcomes. This study, however, uncovers a captivating dynamic – the citizens’ reaction is not solely swayed by the accessibility of fiscal information, but also significantly steered by the public perceptions about the government, particularly when such perceptions are negative and pertain to governmental corruption. Future research could build on these findings by employing diverse research designs to enhance the validity of the results. Analyzing the differential impact of objective indicators versus perceptions of government on the public response to government transparency would be of great interest. Additionally, the extent to which these findings apply to various policy contexts is worth exploring in future studies.

Supplemental Material

sj-docx-1-ras-10.1177_00208523231220599 - Supplemental material for Fiscal transparency and tax morale: is the relationship shaped by perceptions of government performance and corruption?

Supplemental material, sj-docx-1-ras-10.1177_00208523231220599 for Fiscal transparency and tax morale: is the relationship shaped by perceptions of government performance and corruption? by Hung-Yi Hsu in International Review of Administrative Sciences

Footnotes

Acknowledgments

The author thanks Gregg Van Ryzin, Gregory Porumbescu, and Robert Apel for helpful comments on earlier versions of this article.

Data availability

The datasets generated and analyzed during the current study are available in the Figshare repository at the following link: .

Declaration of conflicting interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Hung-Yi Hsu

Supplemental material

Supplemental material for this article is available online.

Hung-Yi Hsu is a doctoral candidate in the School of Public Affairs and Administration (SPAA) at Rutgers University—Newark. His research interests cover a range of public management topics, including transparency, citizen perceptions, performance management, and human resource management.

References

Abushamsieh

López-Hernández

Ortiz-Rodríguez

(2014) The development of public accounting transparency in selected Arab countries. International Review of Administrative Sciences 80(2): 421–442.

Al-Maghrebi

Ahmad

Palil

(2016) Budget transparency and tax awareness towards tax compliance: A conceptual approach. South East Asia Journal of Contemporary Business, Economic and Law 10(1): 95–101.

Alt

Lassen

Skilling

(2002) Fiscal transparency, gubernatorial approval, and the scale of government: Evidence from the states. State Politics & Policy Quarterly 2(3): 230–250.

Alt

Lowry

(2010) Transparency and accountability: Empirical results for US states. Journal of Theoretical Politics 22(4): 379–406.

Andreoni

Erard

Feinstein

(1998) Tax compliance. Journal of Economic Literature 36(2): 818–860.

Bastida

Guillamón

Benito

(2017) Fiscal transparency and the cost of sovereign debt. International Review of Administrative Sciences 83(1): 106–128.

Bauhr

Grimes

(2014) Indignation or resignation: The implications of transparency for societal accountability. Governance 27(2): 291–320.

Bauhr

Grimes

(2017) Transparency to curb corruption? Concepts, measures and empirical merit. Crime, Law and Social Change 68(4): 431–458.

Berman

(1997) Dealing with cynical citizens. Public Administration Review 57(2): 105–112.

10.

Berry

Golder

Milton

(2012) Improving tests of theories positing interaction. The Journal of Politics 74(3): 653–671.

11.

Brambor

Clark

Golder

(2006) Understanding interaction models: Improving empirical analyses. Political Analysis 14(1): 63–82.

12.

Brannon

Tagler

Eagly

(2007) The moderating role of attitude strength in selective exposure to information. Journal of Experimental Social Psychology 43(4): 611–617.

13.

Capasso

Cicatiello

De Simone

, et al. (2020) Fiscal transparency and tax ethics: Does better information lead to greater compliance? Journal of Policy Modeling 43(5): 1031–1050.

14.

Cheeseman

Peiffer

(2023) Why efforts to fight corruption can undermine the social contract: Lessons from a survey experiment in Nigeria. Governance 36(4): 1045–1061.

15.

Chen

Ganapati

(2023) Do transparency mechanisms reduce government corruption? A meta-analysis. International Review of Administrative Sciences 89(1): 257–272.

16.

Ciziceno

Pizzuto

(2022) Life satisfaction and tax morale: The role of trust in government and cultural orientation. Journal of Behavioral and Experimental Economics 97: 101824.

17.

Cook

Gronke

(2005) The skeptical American: Revisiting the meanings of trust in government and confidence in institutions. The Journal of Politics 67(3): 784–803.

18.

Cucciniello

Bellè

Nasi

, et al. (2014) Assessing public preferences and the level of transparency in government using an exploratory approach. Social Science Computer Review 33(5): 571–586.

19.

Daude

Gutiérrez

Melguizo

(2012) What Drives Tax Morale? Paris: OECD Publishing.

20.

Daude

Melguizo

(2010) Taxation and More Representation? Paris: OECD Publishing.

21.

De Renzio

Masud

(2011) Measuring and promoting budget transparency: The open budget index as a research and advocacy tool. Governance 24(3): 607–616.

22.

Doerrenberg

Peichl

(2018) Tax Morale and the role of Social Norms and Reciprocity. Evidence from a Randomized Survey Experiment. Bonn: IZA Institute of Labor Economics.

23.

Festinger

(1957) A Theory of Cognitive Dissonance. Stanford, CA: Stanford University Press.

24.

Frey

(1986) Recent research on selective exposure to information. Advances in Experimental Social Psychology 19: 41–80.

25.

Garrett

Thurber

Fritschler

, et al. (2006) Assessing the impact of bureaucracy bashing by electoral campaigns. Public Administration Review 66(2): 228–240.

26.

Glaser

Hildreth

(1999) Service delivery satisfaction and willingness to pay taxes: Citizen recognition of local government performance. Public Productivity & Management Review 23(1): 48–67.

27.

Goldfinch

Yamamoto

Aoyagi

(2022) Does process matter more for predicting trust in government? Participation, performance, and process, in local government in Japan. International Review of Administrative Sciences 89(3): 842–863.

28.

Grimmelikhuijsen

(2012) Linking transparency, knowledge and citizen trust in government: An experiment. International Review of Administrative Sciences 78(1): 50–73.

29.

Haerpfer

Inglehart

Moreno

, et al. (2022) World Values Survey: Round Seven – Country-pooled Datafile. Madrid & Vienna: JD Systems Institute & WVSA Secretariat.

30.

Hayes

(2018) Introduction to Mediation, Moderation, and Conditional Process Analysis: A Regression-based Approach. New York: The Guilford Press.

31.

Heald

(2012) Why is transparency about public expenditure so elusive? International Review of Administrative Sciences 78(1): 30–49.

32.

Heisig

Schaeffer

(2019) Why you should always include a random slope for the lower-level variable involved in a cross-level interaction. European Sociological Review 35(2): 258–279.

33.

Hvidman

Andersen

(2016) Perceptions of public and private performance: Evidence from a survey experiment. Public Administration Review 76(1): 111–120.

34.

Jordan

Yusuf

J-E

Mayer

, et al. (2016) What citizens want to know about their government's finances: Closing the information gap. The Social Science Journal 53(3): 301–308.

35.

Kam

Franzese

(2007) Modeling and Interpreting Interactive Hypotheses in Regression Analysis. Ann Arbor, MI: University of Michigan Press.

36.

King

Honaker

Joseph

, et al. (2001) Analyzing incomplete political science data: An alternative algorithm for multiple imputation. American Political Science Review 95(1): 49–69.

37.

Knobloch-Westerwick

Mothes

Polavin

(2017) Confirmation bias, ingroup bias, and negativity bias in selective exposure to political information. Communication Research 47(1): 104–124.

38.

Kopits

Craig

(1998) Transparency in Government Operations. Washington, DC: International Monetary Fund.

39.

Levi

Sacks

(2009) Legitimating beliefs: Sources and indicators. Regulation & Governance 3(4): 311–333.

40.

Lord

(2006) The Perils and Promise of Global Transparency: Why the Information Revolution May Not Lead to Security, Democracy, or Peace. Ithaca, NY: State University of New York Press.

41.

Lowry

Alt

Ferree

(1998) Fiscal policy outcomes and electoral accountability in American states. The American Political Science Review 92(4): 759–774.

42.

Luttmer

EFP

Singhal

(2014) Tax morale. Journal of Economic Perspectives 28(4): 149–168.

43.

Manes-Rossi

Aversano

Tartaglia Polcini

(2019) Popular reporting: Learning from the US Experience. Journal of Public Budgeting, Accounting & Financial Management 32(1): 92–113.

44.

Marvel

(2015a) Public opinion and public sector performance: Are individuals’ beliefs about performance evidence-based or the product of anti-public sector bias? International Public Management Journal 18(2): 209–227.

45.

Marvel

(2015b) Unconscious bias in citizens’ evaluations of public sector performance. Journal of Public Administration Research and Theory 26(1): 143–158.

46.

Mehrotra

(2015) Reviving fiscal citizenship. Michigan Law Review 113(6): 943–971.

47.

Meijer

‘t Hart

Worthy

(2015) Assessing government transparency: An interpretive framework. Administration & Society 50(4): 501–526.

48.

Morgeson

Petrescu

(2011) Do they all perform alike? An examination of perceived performance, citizen satisfaction and trust with US federal agencies. International Review of Administrative Sciences 77(3): 451–479.

49.

Nickerson

(1998) Confirmation bias: A ubiquitous phenomenon in many guises. Review of General Psychology 2(2): 175–220.

50.

Peiffer

Alvarez

(2016) Who will be the “principled-principals”? Perceptions of corruption and willingness to engage in anticorruption activism. Governance 29(3): 351–369.

51.

Piotrowski

Van Ryzin

(2007) Citizen attitudes toward transparency in local government. The American Review of Public Administration 37(3): 306–323.

52.

Porumbescu

(2017) Does transparency improve citizens’ perceptions of government performance? Evidence from Seoul, South Korea. Administration & Society 49(3): 443–468.

53.

Porumbescu

Meijer

Grimmelikhuijsen

(2022) Government Transparency: State of the Art and New Perspectives. Cambridge: Cambridge University Press.

54.

Schnell

(2018) Cheap talk or incredible commitment? (mis)calculating transparency and anti-corruption. Governance 31(3): 415–430.

55.

Seifert

Carlitz

Mondo

(2013) The open budget index (OBI) as a comparative statistical tool. Journal of Comparative Policy Analysis: Research and Practice 15(1): 87–101.

56.

Soroka

McAdams

(2015) News, politics, and negativity. Political Communication 32(1): 1–22.

57.

Taber

Lodge

(2006) Motivated skepticism in the evaluation of political beliefs. American Journal of Political Science 50(3): 755–769.

58.

Torgler

(2004) Tax morale in Asian countries. Journal of Asian Economics 15(2): 237–266.

59.

Torgler

(2005) Tax morale in Latin America. Public Choice 122(1/2): 133–157.

60.

van den Bekerom

van der Voet

Christensen

(2020) Are citizens more negative about failing service delivery by public than private organizations? Evidence from a large-scale survey experiment. Journal of Public Administration Research and Theory 31(1): 128–149.

61.

Van der Meer

TGLA

Hameleers

Kroon

(2020) Crafting our own biased media diets: The effects of confirmation, source, and negativity bias on selective attendance to online news. Mass Communication and Society 23(6): 937–967.

62.

Webber

Wildavsky

(1986) A history of Taxation and Expenditure in the Western World. New York: Simon and Schuster.

63.

(2017) Government transparency and perceived social equity: Assessing the moderating effect of citizen trust in China. Administration & Society 49(6): 882–906.

64.

Zelenak

(2013) Learning to Love Form 1040: Two Cheers for the Return-based Mass Income Tax. Chicago: University of Chicago Press.

65.

Zhang

Yang

(2022) A meta-analysis of the government performance—trust link: Taking cultural and methodological factors into account. Public Administration Review 82(1): 39–58.

Supplementary Material

Please find the following supplemental material available below.

For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.

For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.

0.00 MB

0.05 MB