Why do we pay (or not pay) the taxes established by law?

Predisposition towards tax evasion is determined by a combination of personal and circumstantial factors

Edurne Bartolomé Peral, University of Deusto
Hermann Dülmer, Universität zu Köln
Lluís Coromina i Soler, Universitat de Girona

The individual decision to comply with paying taxes goes beyond a strict, rational calculation of the risks and benefits that tax evasion may represent. Various factors of a circumstantial and individual nature enter into play to design the complex equation that explains people’s degree of compliance with their fiscal obligations in Spain. Apart from the value of the tax rates and of sanctions, citizens also take into account whether the rest of the population are also complying with paying their taxes and whether the government is satisfying the contract implicit in tax collection. Furthermore, moral values, age, and level of education stand out among the personal factors that also enter into play. The lower the age or level of education, the greater a person’s predisposition towards tax evasion.
Key points
  • 1
       Citizens do not base themselves only on the amount of the taxes and the calculation of the costs and benefits of paying them or not when complying with their fiscal obligations.
  • 2
       The population is more likely to evade paying taxes if this is perceived to be a generalised practice, because the authorities are viewed as too inefficient to guarantee the fulfilment of tax obligations.
  • 3
       The perception of corruption in the country and of the government not acting to correct inequalities increases people’s predisposition towards tax evasion.
  • 4
       Moral values, level of education, and age play a very significant role when it comes to explaining tax compliance on an individual level.

Classification

Tags

Subject areas

Related content

Infodata

Digital Economy and Society Index

Spain stands at the head of the countries of the EU-27 in the global computation of digital society indicators (connectivity, Internet use, etc). Portugal, however, is situated at the tail end.

Infodata

Inequality in income distribution

The redistributive effect of social transfers is lower in Spain than in the EU-27.

Infodata

Level of economic development

The GDP in purchasing power standards allows a more exact comparison of the level of economic development between countries.

Report

The divide between retro-capitalism and turbo-capitalism

Globalisation and the rapid technological and digital transformation has resulted in two coexisting economic models: “turbo-capitalism”, which works with international logic, and “retro-capitalism”, which adopts the old logic of protectionist capitalism.

Report

The redistributive effects of the system of taxes and transfers in Europe

We analyse possible reforms, considered in a pre-covid-19 scenario, for improving the welfare state in Spain and its redistributive capacity in relation to the European average.

You may also find interesting

Infodata

Percentage of people who view themselves as above their parents or grandparents on the social ladder

Percentage of people who view themselves as above their parents or grandparents on the social ladder

Social Inclusion

Some 29% of Spaniards have a social position above that of their parents, and over 40% believe they have risen above their grandparents on the social ladder.

Infodata

Number of generations necessary so that those born in families with low incomes can reach the average level of income in their society

Number of generations necessary so that those born in families with low incomes can reach the average level of income in their society

Social Inclusion

In Spain, according to this indicator, it takes four generations to improve the incomes of families with precarious finances.

Infodata

Fertility rate

Fertility rate

Social Inclusion

The fertility rate in Spain is 1.23 children per woman, the second lowest rate among European Union countries.