Culture and tax avoidance: the case of Italy

Abstract

Culture is increasingly used as an explanatory variable for tax evasion. So far, we know, however, little about the mechanisms that link culture and tax behavior. This paper is a historical-sociological study of how religion influences tax behavior. The contribution focuses on the Italian case, among Western-European countries one with the highest evasion rates. It argues that the willingness of Italians to pay their taxes still suffers today from the Church–state conflict of the 19th century. To the Vatican, territorial integration of the Italian state posed an existential threat, both at the political (loss of territory) and at the spiritual level (diffusion of liberalism). The paper shows how Catholic socio-economic thinkers developed ideas about just taxation in response to Italian reunification that were directed against the Italian state and used by the Vatican to delegitimize it. The paper shows that it is not only rational decisions about the possibility to get audited or low public service provision that drives tax evasion. Instead Italian tax evasion is legitimized through a historically grown mistrust toward the state.