In this work we look at the role played by cultural values on individuals’ tax behaviour and preferences towards contributing to public goods. More specifically, looking at the transition economies of Central and Eastern Europe (CEE) and the Former Soviet Union (FSU), we analyse the role of specific cultural values in the willingness of an individual to pay more taxes with the aim of improving public good provision relating to education, health, and support of people in need, as well as to combat climate change. To this purpose, we integrate Hofstede’s cultural dichotomy individualism-collectivism with Schwartz’s cultural dichotomy embeddedness-autonomy, as both capture similar values regarding group interest and self-determination. We posit that, individual values aligned with the concept of individualism/autonomy will be associated with a greater willingness to contribute toward public good provision. Our analysis exploits data from the third wave of the Life in transition Survey (2015-2016). Our analyses reveal that respondents’ willingness to contribute to different types of public and common goods is positively associated with them holding values compatible with individualism/autonomy. These associations are statistically significant and robust to changes in specifications and estimators and to changes in the sample investigated. Interestingly, our results are complementary to both trust-based political exchange approach (Gërxhani and Wintrobe, 2021) and to the social capital approach (Rothstein 2005).
Keywords: Taxation, public good, cultural values, transition economies
JEL classification : B52, H29, P36
Wednesday, 6th April, 2022 at 11.00-12.00 Narva Rd 18-1017 and Join MS Teams