The economic crisis during the COVID-19 pandemic has a negative effect on tax compliance: Results from a scenario study in Austria

Andre Julian Hartmann, Katharina Gangl, Matthias Kasper, Erico Kirchler, Martin Kocher, Martin Müller, Axel Sonntag

In a scenario study with 1200 Austrian taxpayers, we examined how tax compliance is affected by the economic crisis related to the COVID-19 pandemic. Moreover, we investigated the potential of trust in government, attitude towards taxes, and justice perceptions in mitigating potential effects. The results suggest a strong effect of the economic environment on tax compliance. Specifically, tax compliance was lower in scenarios where the pandemic had a negative effect on the economy than in scenarios with no negative effect. However, for individuals with a positive attitude towards taxes, compliance was not lower in a negative economic environment than in pre-COVID-19 times. Moreover, we found that taxpayers who were not affected economically, taxpayers with a positive attitude towards taxes, and taxpayers with a low propensity to take risks generally indicated higher levels of tax compliance. Exploratory analyses indicate that taxpayers who change their compliance behavior in response to the economic environment are, on average, younger, less educated, more strongly affected economically, and more uncertain about their current economic situation than taxpayers with stable compliance levels. Policy interventions should target these groups to strengthen tax compliance in times of crisis.

Department of Occupational, Economic and Social Psychology, Department of Economics, Vienna Center for Experimental Economics
External organisation(s)
IHS - Institut für Höhere Studien und wissenschaftliche Forschung
Journal of Economic Psychology
Publication date
Peer reviewed
Austrian Fields of Science 2012
501029 Economic psychology
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