THE TAX AUTHORITY AND THE TAXPAYER An Exploratory Analysis

The issue of tax compliance has been dealt with in the literature almost exclusively by studying the behavior of taxpayers. But important insights on tax compliance can be gained by looking at how the tax authority deals with the taxpayers. Taxpayers’ willingness to pay their taxes, or tax morale, is supported, or even raised, when the tax officials treat them with respect. In contrast, when the tax officials consider taxpayers purely as ‘subjects’ who have to be forced to pay their dues, the taxpayers tend to respond by actively trying to avoid taxation. Using data for Swiss cantons and five different years from the period 1970 to 1995, we establish a systematic relationship between external intervention (in this case, how the tax officials deal with taxpayers) and intrinsic motivation (in this case, individuals’ tax morale).