Does voting on tax fund destination imply a direct democracy effect?
Abstract
International audience ; Does giving taxpayers a voice over the destination of tax revenues lead to more honest incomedeclarations? Previous experiments have shown that giving participants the opportunity toselect the organization that receives their tax funds tends to increase tax compliance. The aimof this paper is to assess whether this increase in compliance is induced by the sole fact of givingsubjects a choice — a "direct democracy effect". To that aim, we ask participants to a taxevasion game to choose, in a collective or individual choice setting, between two very similarorganizations which provide the same social (ecological) benefits. We elicit compliance for bothorganizations before the choice is made so as to control for the counter-factual compliancedecision. We find that democracy does not increase compliance, and even observe a slightnegative effect — in particular for women. Our results confirm the existence of a commitmenteffect of democracy, leading to favor more the selected organization when it was actively chosen.The commitment effect of democracy is however not enough to overcome the decrease in thelevel of compliance. Thanks to response times data, we show that prior choice on similaroptions as compared to a purely random selection weakens the preference for honesty. Oneimportant field application of our results is that democracy in tax spending must offer realchoices to tax payers to improve compliance.
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