Development Policy Centre Podcast

Taxation is central to the social contract between citizens and the state. Yet little research has explored the relationship in developing countries between individual attitudes towards the social contract and perceptions of tax fairness and efficacy. This recording of a seminar draws on experimental research with informal sector workers in Mexico and a unique survey on taxation and social protection in Myanmar to help advance the debate. Focusing on individual perceptions, they show that in contexts of high informality and weak state capacity, reciprocity and individual preferences for redistribution shape tax morale. They point to the centrality of fairness, finding that tax morale is lower when individuals have stepped outside of the social contract and the welfare state through reliance on private insurance or informal reciprocity mechanisms. Furthermore, they present evidence that individuals are less willing to pay taxes when they doubt the redistributive capacity of the state or know the rich will ulti