A taxing issue: understanding citizen attitudes to state institutions

Compliance experiments carried out by EU-funded researchers suggest that the word ‘fee’ inclines a high percentage of people to avoid paying tax. The research, carried out through the EU-funded WILLING TO PAY? project, could have long term implications for how tax is collected in the future.


Participants were asked to perform a series of simulated tasks in which they were required to report what they earned. While free to state what they pleased, participants were informed that they would have to pay a fine equal to twice the amount of taxes due if caught cheating.


The researchers found that when participants read the word ‘fee’ instead of ‘tax’, they paid, on average, 10 % less of the taxes they owed. Furthermore, when participants were given the chance to pay a ‘fee’ or a ‘tax’ into a fund which was then progressively redistributed, the figures revealed that they would overwhelmingly rather pay the tax.


These initial findings suggest that the word ‘tax’ may not be as politically charged as politicians think, and that the word ‘fee’ might in fact be the more negative of the two.


The WILLING TO PAY? project, which was launched in September 2012, comes at a time when many European countries face a number of demanding demographic, economic and fiscal pressures. These include providing for an aging population and maintaining adequate social welfare, while at the same time addressing pressure to reduce taxes.


In order to better understand the actual policy choices facing governments, the European University Institute in Florence, Italy aims to examine the nuanced interaction between political institutions, public policies and citizen preferences. The researchers also want to develop a better understanding of how institutions shape and modify people’s decisions, and how these institutions might be better adapted in order to be more effective.


The project also notes that differences in attitudes to tax can be found across Europe. In Italy for example, the population tends to have a profoundly negative and distrustful attitude towards governmental responsibility, in contrast to Scandinavian countries like, say, Sweden. The project aims to put these assumptions to the test, in order to better understand the motivations behind differing attitudes in countries as diverse as Italy, Sweden, Great Britain and the US.


Ultimately, WILLING TO PAY? hopes to shed new light on the interactive relationships between institutions and citizens, and explain the multiple paths and different choices that have been made in different democratic welfare states. The research represents an important advance in experimental economics, with citizen-trials modelled on real institutions and real policy choices.


It is hoped that the project, due for completion in August 2017 and funded through the European Research Council (ERC) under the EU’s Seventh Framework Programme, will generate findings that can be applied to improve tax regimes across Europe. WILLING TO PAY? argues that only through understanding what citizens actually believe about their state, and why, can governments begin to see how policy systems can be reformed.