Tax Morale and Pro-Social Behavior: Evidence from a Palestinian Survey

The Palestinian context is missing in the tax morale literature. Hence, in this paper we consider public spirit and associational activity two major expressions of pro-social behavior and we estimate their impact on Palestinians’ tax morale (intrinsic motivation to pay taxes). The empirical analysis uses a unique dataset based on a survey conducted by the Palestine Economic Policy Research Institute in 2007 in the West Bank and Gaza Strip. By using a bivariate probit model, we find that tax morale increases with public spirit but it is lower among Palestinians involved in associational activities. Predicted conditional probabilities indicate that public spirit has more impact when the respondent has low confidence in the institutions and in the rule of law. Finally, more public spirit is required for a self-employed worker in order to deal with tax compliance than for a worker in the public sector, unless the worker in the public sector has lower confidence in the institutions and in the rule of law than the self-employed worker.  

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