The quiet Portuguese: Are Portuguese taxpayers victims of fiscal illusion?
Article Sidebar
Main Article Content
Abstract
This article discusses the four dimensions generating fiscal illusion through a survey answered by a sample of the population of the northern region of Portugal. The surveyed dimensions were (1) bias in the taxpayers' perception of the costs and benefits of public programs; (2) ignorance or inattention about the fiscal reality (like about tax structure or associated collection); (3) taking advantage of the taxpayer's timing and expectations for an optimized tax collection; and (4) association of the surrounding socioeconomic reality with the tax structure. The results show that the most serious dimension present among the analyzed Portuguese taxpayers is the relative lack of attention to fiscal reality. Through an analysis using appropriate tests, it was observed that some dimensions, such as education and taxpayer income, significantly influence the individual risk of fiscal illusion.
Keywords:
Cited by
Article Details
References
ACEA (2019). ACEA Tax Guide 2019. Brussels, Belgium: European Automobile Manufacturers Association. Recuperado de https://www.acea.be/uploads/news_documents/ACEA_Tax_Guide_2019.pdf
Bardhan, P., & Mookherjee, D. (2005). Decentralizing antipoverty program delivery in developing countries. Journal of Public Economics, 89(4), 675-704. DOI: https://doi.org/10.1016/j.jpubeco.2003.01.001
Blaufus, K., Bon, J., Hundsdoerfer, J., Sielaff, C., Kiesewetter, D., & Weimann, J. (2015). Perception of income tax rates: evidence from Germany. European Journal of Law and Economics, 40, 457-478.
Brumby, J. (1999). Budgeting reforms in OECD member countries. In S. Schiavo Campo & D. Tommasi, Managing government expenditure (pp. 486-508). Manila, Philippines: Asian Development Bank (ADB). Recuperado de https://www.adb.org/sites/default/files/publication/27901/managing-government-expenditure.pdf
Buchanan, J. (1960). Fiscal theory and political economy. Durham, NC: University of North Carolina Press.
Christensen, A., Weihrich, S., & Newman, M. (1994). The impact of education on perceptions of tax fairness. Advances in Taxation, 6, 63-94.
Costa, L. (2017). Literacia fiscal: Importância e perceção – Peniche. (Master Dissertation). Lisboa, Portugal: Instituto Superior de Economia e Gestão. Recuperado de https://comum.rcaap.pt/bitstream/10400.26/23044/1/LITERACIA%20FISCAL%20%e2%80%93%20IMPORT%c3%82NCIA%20E%20PERCE%c3%87%c3%83O%20%e2%80%93%20PENICHE.pdf
Da Empoli, D. (2002). The theory of fiscal illusion in a constitutional perspective. Public Finance Review, 30(5), 377-384. DOI: https://doi.org/10.1177/109114210203000504
Dell’Anno, R., & Mourão, P. (2012). Fiscal illusion around the world: An analysis using the structural equation approach. Public Finance Review, 40(2), 270-299. DOI: https://doi.org/10.1177/1091142111425226
Direção Geral do Orçamento (DGO, 2017). Síntese de execução orçamental. Dezembro/2017. Lisboa, Portugal: DGO.
Dollery, B. E., & Worthington, A. C. (1995). State expenditure and fiscal illusion in Australia: A test of the revenue complexity, revenue elasticity and flypaper hypotheses. Economic Analysis and Policy, 25(2), 125-140. DOI: https://doi.org/10.1016/S0313-5926(95)50021-9
Dollery, B. E., & Worthington, A. C. (1996). The empirical analysis of fiscal illusion. Journal of Economic Surveys, 10(3), 261-297. DOI: https://doi.org/10.1111/j.1467-6419.1996.tb00014.x
Downs, A. (1960). Why the government budget is too small in a democracy. World Politics, 12(4), 541-563. DOI: https://doi.org/10.2307/2009337
Eriksen, K., & Fallan, L. (1996). Tax knowledge and attitudes towards taxation; A report on a quasi-experiment. Journal of Economic Psychology, 17(3), 387-402. DOI: https://doi.org/10.1016/0167-4870(96)00015-3
Fasiani, M. (1949). Contributi di Pareto allascienzadellefinanze. Giornale degli Economisti e Annali di Economia, 8(3-4), 129-173.
Ferreira, A. P. (2013). Atitude e percepção dos impostos-o caso português. (Master Dissertation). Porto, Portugal: Universidade do Porto, Faculdade de Direito. Recuperado de https://repositorio-aberto.up.pt/bitstream/10216/69842/2/25409.pdf
Fischer, C. M., Wartick, M., & Mark, M. (1992). Detection probability and tax compliance: A review of the literature. Journal of Accounting Literature, 11(2),1-46.
Fochmann, M., & Weimann, J. (2013): The effects of tax salience and tax experience on individual work efforts in a framed field experiment. FinanzArchiv/Public Finance Analysis, 69(4), 511-542. DOI: http://doi.org/10.1628/001522113X675692
Hammar, H., Jagers, S. & Nordblom, K. (2008). Attitudes towards tax levels: A multi tax comparison. Fiscal Studies, 29(4), 523-543. DOI: http://doi.org/10.1111/j.1475-5890.2008.00084.x
Heyndels, B., & Smolders, C. (1995). Tax complexity and fiscal illusion. Dordrecht, Netherlands: Kluwer Academic Press.
Huot, R. (1992). La pratique de recherche en sciences humaines. Boucherville, QC: Gaëtan Morin.
Jones, L. R., & Thompson, F. (1999). Public management: Institutional renewal for the twenty first century. Stamford, CT: Elsevier JAI Press.
Klerman, D. (2017). Takings, fiscal illusion, and the median voter. Journal of Institutional and Theoretical Economics (JITE), 173(1), 71-76. DOI: http://doi.org/10.1628/093245616X14743741664872
Magee, S. P., Brock, W. A., & Young, L. (1989). Black hole tariffs and endogenous policy theory. Cambridge University Press.
Malhotra, N. K. (2012). Pesquisa de marketing: Uma orientação aplicada. Bookman Editora.
McCulloch, J. (1845/1975). A treatise on the practical influence of taxation and the funding system. Edinburgh, Scotland: Scottish Academic Press and Holmes & Meier.
Mei Tan, L., & Chin-Fatt, C. (2000). The impact of tax knowledge on the perceptions of tax fairness & attitudes towards compliance. Asian Review of Accounting, 8(1), 44-58. DOI: https://doi.org/10.1108/eb060720
Mill, J. S. (1848/1857). Principles of political economy with some of their applications to social philosophy. George Manchester, England: Routledge.
Mourão, P. (2008). Towards a Puviani’s fiscal illusion index. Hacienda Pública Española, 187(4), 49-86.
Mourão, P. (2010). Fiscal illusion causes fiscal delusion–Please be careful! In S. Tenereiro de Magalhães, H. Jahankhani & A. G. Hessami (Eds.), Global Security, Safety, and Sustainability. ICGS3 2010. Communicacións in Computer and Information Science, 92 (pp. 232-237). Berlin and Heidelberg, Germany: Springer. Recuperado de https://link.springer.com/chapter/10.1007/978-3-642-15717-2_25
Munley, V. G., & Greene, K. V. (1978). Fiscal illusion, the nature of public goods and equation specification. Public Choice, 33(1), 95-100. DOI: http://doi.org/10.1007/BF00123948
Nabais, J. C. (2003). Direito fiscal, vol. 2. Coimbra, Portugal: Almedina. National Institute of Statistics of Portugal (INE, 2019). Destaque - Contas nacionais trimestrais por setor institucional (4º trimestre de 2018). Lisboa, Portugal: INE.
Oates, W. E. (1985). On the nature and measurement of fiscal illusion: A survey. College Park, MD: Universiy of Maryland, Department of Economics.
Oates, W. E. (1988). On the nature and measurement of fiscal illusion: A survey. In G. Brennan, B. S. Crewel & P. Groenwegen (Eds.), Taxation and fiscal federalism: Essays in Honour of Russell Mathews. Canberra, Australia: Australian National University Press
Oberholzer, R. (2007). Perceptions of taxation: A comparative study of different population groups in South Africa. (Doctoral Dissertation). Pretoria, South Africa: University of Pretoria.
OECD (2019). Risks that matter: Main findings from the 2018 OECD risks that matter survey. Paris, France: OECD. Recuperado de www.oecd.org/social/risks-that-matter.htm
Palil, M. R. (2005). Does tax knowledge matters in self-assessment systems? Evidence from Malaysian tax administrative. Journal of American Academy of Business, 6(2), 80-84.
Peacock, A. (1997). Public choice analysis in historical perspective. Cambridge, England: Cambridge University Press. DOI: https://doi.org/10.1017/CBO9780511559532
Pommerehne, W. W., & Schneider, F. (1978). Fiscal illusion, political institutions, and local public spending, Kyklos, 31(3), 381-408. DOI: https://doi.org/10.1111/j.1467-6435.1978.tb00648.x
Puviani, A. (1903). Teoria della illusione finanziaria. Palermo, Italy: Sanaron.
Ricardo, D. (1820/1951). Funding systems. In P. Sraffa (Ed.), The works and correspondences of David Ricardo, vol. 4, Pamphlets and papers 1815-1823. Cambridge, England: Cambridge University Press.
Robbins, S.P. (2001). Organisational behaviour. 9th ed. Upper Saddle River, NJ: Prentice Hall.
Sanandaji, T., & Wallace, B. (2010). Fiscal illusion and fiscal obfuscation: An empirical study of tax perception in Sweden. IFN Working Paper No. 837. Stockholm, Sweden: Research Institute of Industrial Economics (IFN). DOI: http://dx.doi.org/10.2139/ssrn.1619268
Sausgruber, R., & Tyran, J. R. (2005). Testing the Mill hypothesis of fiscal illusion. Public Choice, 122(2), 39-68. DOI: http://dx.doi.org/10.2139/ssrn.699962
Schmoelders, G. (1960). Das Irrationale in der öffentlichen Finanzwirtschaft. Hamburg, Germany: Rowohlt.
Sousa, R. A. S. (2016). A descentralização e as finanças públicas - Contributo da qualidade da governação. (Master Dissertation). Porto, Portugal: Universidade do Porto.
Stiglitz, J. (2015). Economics of the public sector. New York, NY: W. W. Norton.
Tanzi, V. (2011). Government versus markets: The changing economic role of the state. New York, NY: Cambridge University Press.
Tremblay, A. (1991). Sondages. Boucherville, QC: Gaëtan Morin.
Turnbull, G. K. (1998). The overspending and flypaper effects of fiscal illusion: Theory and empirical evidence. Journal of Urban Economics, 44(1), 1-26. DOI: https://doi.org/10.1006/juec.1997.2056
Varela, P. S., Martins, G. D., & Fávero, L. P. L. (2010). Ineficiência do gasto público e ilusão fiscal: Uma avaliação do flypaper effect na atenção básica à saúde. IV Congresso ANPCONT. Anais, Natal, Brasil.
Vitorino, A. F. M. (2016). Ilusão fiscal: Uma análise comparativa para os países da UE. (Master Dissertation). Porto, Portugal: Universidade do Porto.
Wagner, R.E. (1976). Revenue structure, fiscal illusion and budgetary choice. Public Choice, 25, 45-46. DOI: http://doi.org/10.1007/BF01726330
Wang, X., & Bohn, F. (2019). Pension reserve fund, political budget cycles and fiscal illusion. European Journal of Political Economy, 56, 62-73. DOI: https://doi.org/10.1016/j.ejpoleco.2018.07.002
White, R. A., Curatola, A. P., & Samson, W. D. (1990). A behavioral study investigating the effect of knowledge of income tax laws and tax policy on individual perceptions of federal income tax fairness. Advances in Taxation, 3, 165-185.
Winter, S., & Mouritzen, P. (2001). Why people want something for nothing: The role of asymmetric illusion. European Journal of Political Research, 39, 109-43. DOI: https://doi.org/10.1023/A:1007185029456
Most read articles by the same author(s)
- Óscar Rodil-Marzábal, María del Carmen Sánchez-Carreira, Paulo Jorge Reis Mourão, Marta Gancarczyk, Euroregions in Perspective: Old Issues and New Challenges for Cooperation , Revista Galega de Economía: Vol 31 No 2 (2022): Special Issue. Euroregions in Perspective: Old issues and new challenges for cooperation