Tax Morale and Its Determinants in the Republic of Kosovo

Abstract

This paper aims to look into empirical determinants such as socio-demographic and socio-economic in tax morale in the Republic of Kosovo. The data set survey of 300 respondents is intended to research socio-demographic and socio-economic determinants in tax morale. Due to a lack of data from the World Value Survey or other relevant institutions, we conducted an online survey with Kosovar residents. The impact of socio-demographic and socio-economic determinants on tax morale was examined using the ordered probit model. Based on the results of the scientific work it has emerged that, tax morale is positively influenced by larger family sizes (6.00), whereas lower financial conditions (2.00), smaller family sizes (1.00), and the perception of a negative impact of the informal economy (1.00) significantly decrease tax morale. Also some of the factors included in the analysis which do not have a significant effect on tax morale are: gender, age, residential locality, education, participation in undeclared work, purchase of goods and services in the informal market, perceptions of punishment for unregistered activities, opinions of the amount of tax paid, consideration of social benefits in tax avoidance, non-issuance of fiscal receipts by business. Therefore, policymakers should pay special attention to the lower financial conditions, smaller family sizes, informal economy impact and other factors with significant negative impact on tax morale. The study has some limitations, which have to do with the exclusion of other factors that could affect tax morale, apart from socio-demographic and socio-economic determinants. Although the study’s findings may be helpful to researchers, policymakers’ institutions.