Corruption, Tax Preferences and Compliance

Abstract

This paper examines whether exposure to political corruption influences tax preferences and compliance. We conduct a conjoint experiment in the Indian state of Bangalore, where respondents are randomly exposed with vignettes of political candidates who differ in their corruption status, status, political affiliation, and public spending promises. Preliminary findings show that political corruption reduces willingness to disclose tax evasion. Respondents exposed to corruption treatment appear to have a lower tolerance for tax evasion, even under conditions where such behaviour might be seen as justifiable. We find no change in behaviour based on the public goods promised or political affiliation. These findings suggest that exposure to corruption undermines trust in government and fosters moral distancing from tax evasion.