Political mood, government support, and tax morale: evidence from stated willingness to pay for tax-financed projects

This study empirically explores the influence of the public approval of the government – namely, the political mood—on intrinsic tax morale using data obtained from 33 contingent valuation surveys for tax-financed projects in South Korea. Our novel approach utilizes a zero stated willingness to pay as a baseline behavioural proxy for lower intrinsic tax morale. Employing baseline probit models alongside multinomial probit models that leverage protest bids to unpack underlying motives, we demonstrate that the political mood and intrinsic tax morale are positively and significantly associated. Furthermore, results suggest that short-term fluctuations in presidential approval ratings exert an acute effect on stated tax compliance, driven primarily by perceived procedural injustice rather than general government distrust. While confirming previous findings that regional political alignment positively influences stated compliance, our analysis suggests evidence of a novel structural phenomenon: residing in regions characterized by deep-rooted partisan dominance significantly lowers baseline tax morale, regardless of the incumbent political party.