The social contract, preferences for redistribution, and tax morale

Taxation is central to the social contract between citizens and the state. Yet little research has explored the relationship in developing countries between individual attitudes towards the social contract and perceptions of tax fairness and efficacy.

This recording of a seminar draws on experimental research with informal sector workers in Mexico and a unique survey on taxation and social protection in Myanmar to help advance the debate.

Focusing on individual perceptions, they show that in contexts of high informality and weak state capacity, reciprocity and individual preferences for redistribution shape tax morale. They point to the centrality of fairness, finding that tax morale is lower when individuals have stepped outside of the social contract and the welfare state through reliance on private insurance or informal reciprocity mechanisms. Furthermore, they present evidence that individuals are less willing to pay taxes when they doubt the redistributive capacity of the state or know the rich will ultimately benefit.

David Doyle is an Associate Professor of Politics in the Department of Politics and International Relations at the University of Oxford, a Fellow of the Latin American Centre and a Fellow of St Hugh’s College. He is the co-convener of the European Consortium for Policitcal Research Standing Group on Latin American Politics and an Associate Editor of the journal Oxford Development Studies.

Gerard McCarthy is a doctoral fellow in the Department of Political and Social Change at The Australian National University and Associate Director of ANU Myanmar Research Centre. He has advised and consulted for a range of agencies including International Growth Centre Myanmar, United States Institute of Peace and the Carter Centre.

Devpolicy Talks is the podcast of the Australian National University's Development Policy Centre.

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