| Tax compliance is one of the most important issues in public finance theory and practice.As a benchmark of tax compliance research,A-S model(Allingham&Sandmo,1972)provides an expected utility framework for explaining individual’s tax compliance decisions.However,there exists apparent discrepancy between A-S model and empirical evidence,which leads to the so called "tax compliance puzzle".Some researchers applied tax morale,which is defined as intrinsic motivations,or more broadly,non-pecuniary motivations of tax compliance,to explain the high degree of tax compliance in practice.Although the past two decades have seen the pour of literatures on tax morale,most of them focus on the influences of tax morale on tax compliance rather than the determinants of tax morale.Tax morale was treated more like a black box in those researches.In fact,deterrent measures of tax authority and the manner of tax officials will potentially influence the intrinsic motivation of residents,which makes it significant to examine the effects of tax reform on tax morale.Fortunately,China’s VAT reform,which broadened VAT to all industries and thus unavoidably changed tax system and tax administration,provides a quasi-nature experiment to identify the effect of tax reform on residents’tax morale.In this paper,we attempt to answer two questions:(1)Dose tax reform affect tax morale?(2)How does tax reform affect tax morale?Therefore,we construct a theory model firstly to analyze how tax morale is determined,in which we argue that tax morale is contingent on five factors:demography factors(e.g.sexuality),socio-economic factors(e.g.income),perception factors(e.g.perceived fairness of the tax system),psychology-ethnics factors(e.g.guilty)and bounded rationality factors(e.g.information imperfection and deviations from expected utility).Secondly,we use OLS estimator,ML estimator and kernel matching DID estimator(for repeated cross-section data)with micro-data of World Value Survey to estimate the impact of VAT reform on tax morale.Then we discuss the heterogeneity in the effect.Finally,based on the province-level panel data of china,we analyze the mechanisms by mediating effect model.We find that(1)tax reform does affect residents’ tax morale;(2)and the channels include tax policy uncertainty and tax effort.Specifically,tax reform influences tax elements and tax enforcement behavior,which affect residents’perception of tax system and tax administration and eventually affect their attitudes toward paying taxes or tax morale.China’s VAT reform,which was initiated in 2012,did increase the uncertainty of tax policy and tax effort of tax authority,and then crowded out individuals’ tax morale in the short run.These results are robust under a series of sensitivity tests.The policy implication is that residents’ tax morale of China could be increased at least in two ways.One is to implement the statutory principle of taxation,which will undoubtedly improve the certainty of tax elements.The other is to optimize intergovernmental tax assignment according to spending responsibility of each government level,which will avoid irregular behavior of tax authorities in fulfilling tax plan.These ways are indeed the requirements to promote state governance modernization too.As an original investigation,this paper examines the causality effect and mechanism of tax reform on residents’ tax morale with micro-data of WVS and the province-level panel data of china,which contributes to the literature on tax reform and tax morale by providing a comprehensive analysis on micro-effect of tax reform on tax morale.Limited by process of pilot and data,we cannot analyze medium and long run effect of tax reform,which needs further researches. |
