TAX MORALE IN LITHUANIA

Abstract

Taxes play a vital role within a nation’s financial system, enabling the government to maintain a consistent revenue stream that can be distributed and used for the nation’s economic and social progress. As taxes are the most important source of revenue for the state budget, it is essential that taxpayers understand taxes not only as a monetary obligation or burden, but also as a resource that is self-evident and necessary for the well-being of society. However, not all taxpayers are willing to comply with this obligation and pay their taxes in good faith. Tax morale is usually defined as the intrinsic motivation to pay taxes honestly (Casal, Faillo and Mittone, 2022). With high tax morale, taxpayers pay taxes honestly and willingly, while those with low tax morale are prone to tax fraud or to not paying taxes at all. This behaviour may be due to a variety of factors, but citizens' tax behaviour cannot be understood without taking into account moral considerations (Fotiadis and Chatzoglou, 2022). The aim of the article – to identify the tax morale of the occupied Lithuanian taxpayers and its determinants.

The analysis of the concept of tax morale has led to the general concept of tax morale, according to which tax morale can be explained as a taxpayer's intrinsic motivation to pay taxes honestly and deliberately. The factors influencing tax morale can be divided into two groups: socio-demographic characteristics (gender, age, education, income, etc.) and regulatory-legal (trust in government and tax authorities; general attitudes towards tax in society). A questionnaire survey of the occupied population of Lithuania was chosen to conduct the study of tax morale in Lithuania, the questions of which included socio-demographic characteristics of the respondents, analysis of the situations, analysis of the factors justifying tax fraud and factors influencing fair tax payment. The tax morale survey showed that the level of tax morale in Lithuania is average, with just over 50% of taxpayers having high tax morale. The analysis of the influence of socio-demographic factors on tax morale showed that tax morale increases with the age and education of taxpayers. The relationship between other socio-demographic factors and tax morale was found to be statistically insignificant. The most significant factors that reduce tax morale are excessive tax burden and an unfair and unjust tax system, which is why it is important to ensure that the country has a fair and just tax system. The factors that contribute most to tax morale are awareness and trust, and clarity and simplicity, the most important of which is a simple and clearly understandable tax assessment and declaration process. Therefore, in order to increase the level of tax morale in Lithuania, it is important to raise taxpayers' awareness and knowledge of taxes, but as this is a time-consuming process, more attention should be paid not only to taxpayers but also to educating younger people who are not yet in employment, thus developing their tax morale.