Government's level of accountability and their responsiveness significantly influence citizens' compliance with tax obligations.
In a groundbreaking study, MIT's Ford Professor of Political Science, Lily L. Tsai, and her co-authors, including Minh Trinh '22, have shed light on the factors affecting property tax compliance in China. The research, published in 2021, focuses on the role of government accountability and the punishment of corruption in shaping citizens' willingness to comply with property tax laws.
Tsai's book, "When People Want Punishment: Retributive Justice and the Puzzle of Authoritarian Popularity," discusses the importance of authorities punishing their own officials in maintaining legitimacy. This concept seems to hold true in the Chinese context, where the study found that government accountability and the punishment of corruption positively influence Chinese citizens' willingness to pay property taxes.
The study, conducted in Shanghai—one of the two cities in China that collect property taxes—revealed that citizens favoured policies that allowed for government responsiveness to their needs and held officials accountable for corruption and poor performance. Participants expressed higher support for property tax policies incorporating citizen input on tax revenue use and sanctions against corrupt officials.
Interestingly, the researchers found that these non-economic factors such as transparency, accountability, and responsiveness had a comparable impact on tax compliance willingness as economic incentives like tax exemptions or lighter penalties.
The study also tested how governments might make people more willing to pay property taxes. The findings suggest that policies that allow for citizen input and accountability received roughly the same support as those with economic benefits.
Participants in the experiment played a game on an iPad, choosing whether or not to pay property taxes. The earnings varied based on their choices and those of other participants. The researchers found that participants who learned the government punished corrupt officials paid their property taxes more frequently.
Moreover, the study found that participants were more likely to pay taxes when they perceived government officials as motivated by public good and integrity. This indicates that even when there aren't opportunities for citizens to make their voices heard, other factors can contribute to government legitimacy and voluntary compliance with rules.
The study's findings challenge the notion that the strength of democratic institutions is directly linked to perceptions of government legitimacy. Despite the global decline in democratic institutions, the findings suggest that this may not necessarily lead to a decline in perceptions of government legitimacy.
In conclusion, the study provides valuable insights into the factors influencing property tax compliance in China. It underscores the importance of government accountability and the punishment of corruption in fostering trust and perceived fairness of the tax system, thereby enhancing citizens’ willingness to comply with property tax laws.
- The study published in 2021, conducted by MIT's Lily L. Tsai and her colleagues, including Minh Trinh '22, delves into the factors affecting property tax compliance in China, focusing on government accountability and the punishment of corruption.
- In the Chinese context, the research reveals that government accountability and the punishment of corruption positively impact Chinese citizens' readiness to pay property taxes.
- The study conducted in Shanghai, one of the two cities in China that collect property taxes, shows that citizens favor policies that promote government responsiveness and accountability.
- Interestingly, the study finds that non-economic factors such as transparency, accountability, and responsiveness have a comparable impact on tax compliance willingness as economic incentives.
- The findings suggest that policies that allow for citizen input and accountability receive roughly the same support as those with economic benefits, challenging conventional wisdom.
- The study's observations indicate that even in the absence of opportunities for citizens to voice their opinions, factors like the perception of government officials as motivated by public good and integrity can contribute to government legitimacy and voluntary compliance with rules.
