Abstract:
We investigate how political corruption affects citizens' willingness to disclose tax evasion. We conducted a survey experiment with 1,200 respondents in Bangalore, India, combining corruption vignettes and list experiments. Respondents were randomly presented with hypothetical candidates whose attributes varied along three dimensions: (a) alleged honesty versus corruption; (b) prioritization of infrastructure versus other public spending; and (c) political party affiliation. Contrary to conventional expectations, exposure to corruption cues reduced respondents' likelihood of disclosing tax evasion, both for themselves and for their community. We further find that the type of public spending does not affect tax evasion reporting, and that respondents with moderate preferences over different tax structures are less supportive of financing public spending through direct taxation. Corruption cues neither increase the willingness to justify evasion nor affect tax morale. Overall, our results suggest that respondents distance themselves from admitting illegal behaviour when corruption is made salient.
