Withholding information regarding one’s income in order to pay less tax has moral and legal implications [1] . The state needs sources of income, in order to be able to offer services and provide security to its citizens. On the other hand, the government frequently wastes public money due to inefficient management and sometimes due to illegal abuse. Consequently, citizens deviate from the legal procedure regarding the payment of taxes, while the government sometimes crosses the limits of good public administration.

Since 2008, in the light of the economic crisis, more strict measures have been taken regarding the detection of “concealed” income [2] . In this scope, governing practices regarding tax revenue collection have been developed in the European Union (EU). Moreover, exchange of information regarding “concealed” income is also promoted between member states and countries such as Switzerland, Monaco, San Marino and Liechtenstein [3] . During the last years, the European Parliament has greatly contributed on the implementation of initiatives regarding the mitigation of tax evasion and money laundering from illegal activities [4] . As a result, governments in the EU have enacted and enforced more sophisticated legislation against tax evasion. Greece has a very strict legal system. However, the current “overregulation” often results in contradictions between various laws and law complexity, which enhances tax evasion. At the same time, there is a significant decrease in VAT revenue in Greece, compared to the rest of the European Union.

The aim of this paper is to explore the issue of tax ethics and tax evasion in order to identify in which situations tax evasion is accepted as ethical and which social groups consider tax evasion to be more acceptable. Moreover, we will analyze the tax ethics of Greek citizens and compare it to that of citizens from other countries. Regarding the contribution of our paper to academic research, we will use Robert McGee’s questionnaire to measure tax evasion and tax ethics of Greek citizens. To our knowledge, no other research has been conducted having used an internationally recognized research tool to compare Greece to other countries and identify the characteristics of citizens which make them justify tax evasion.

The paper is structured as follows: first, the concepts of tax ethics and tax evasion are presented and a literature review is conducted. Next, we introduce the research methodology and present the research questions as well as the measurement instrument. Then the results of the empirical survey are presented. The paper concludes with the main conclusions, limitations and proposals for future research.

Tax ethics refers to the tax payer’s moral obligation to pay taxes and is affected by the relationship between the tax payer, as a citizen, and the government. Tax ethics and tax evasion are often used interchangeably. Tax evasion, however, refers to a person actively trying to avoid paying tax [5] while tax ethics refers to all non-monetary incentives to comply with tax legislation [6] . Measuring tax ethics helps to indirectly measure the size of “shadow economy”, since not many individuals are willing to reveal whether they have committed financial irregularities or not. Consequently, a higher degree of tax ethics is positively related to regular tax payments and compliance to tax regulations. On the contrary, individuals with a low degree of tax ethics are more prone to tax evasion [5] . Tax ethics is usually estimated through large-scale surveys that explore the values and beliefs of people, the way they change over time, and their social and political implications.

According to the Organization for Economic Cooperation and Development [7] , the concept of tax evasion is generally used to describe illegal arrangements where tax liabilities are either hidden or ignored. In other words, the taxpayer pays less tax than he is legally obliged to pay by concealing income or information from the tax authorities. Tax fraud is a form of deliberate tax evasion and forms a criminal action. The term includes the deliberate misstatement of accounting information, falsification of documents, etc. Tax evasion is not the same as tax mitigation, which is the taxpayer’s attempt to reduce his tax obligations or to avoid paying taxes by taking advantage of potential vague legislation, without, however, committing illegal actions. Tax evasion and has vast negative social and economic consequences, as it leads to uneven distribution of tax burdens and income and deprives states of their basic source of revenue. This results in governments raising existing tax levels, which in turn slows down economic growth and places additional burden to citizens who are consistent with their tax obligations. Summarizing, tax evasion negatively affects economic growth and raises social inequalities.

The attitude of citizens towards tax obligations is affected by various factors [6] . For example, several studies show that tax ethics is higher among older citizens, citizens who have strong religious beliefs or citizens who trust politicians. Moreover, international research has shown that tax ethics is positively related to tax system fairness and government transparency and negatively related to tax evasion and shadow economy [5] .

In Portugal, a survey conducted by the European Values Study during the period 2008 to 2010 showed that behavioral, psychological and political factors have a direct impact on tax ethics. Fairness in the democratic political system and citizens’ personal satisfaction with the system has a direct influence on tax ethics. Alternatively, citizens who believe that their political system is good have stronger tax ethics. On the other hand, there is a negative relationship between tax ethics, political participation and mistrust, i.e. citizens who are actively involved in politics and who do not trust others have weaker tax ethics [8] . In Turkey, trust in the state, religion, and national pride are positively related to compliance to social requirements such as tax payment. In other words, Turkish citizens who feel confident of social norms have a high level of tax ethics compared to those who do not [9] .

In Spain, unlike Turkey, trust in the political system and religion do not have an effect on tax ethics. Nevertheless, national pride and a higher level of education have a positive impact on tax ethics [9] . In Russia, the World Value Survey research findings for the years 1999, 2006 and 2011 were analyzed over time, as significant changes have been made to the tax system and the way the state operates. The analysis showed a decrease in the level of tax ethics in recent years, which can be explained by the tax changes made in favor of the high income citizens. These changes have probably affected the tax ethics of the low income citizens and their desire to be consistent with their tax obligations.

In Pakistan, survey results show that women have significantly higher tax ethics than men. Similarly, pensioners comply more with tax legislation than non-pensioners while self-employed citizens have weaker tax ethics [10] . In Mauritania, similar to other surveys, married citizens and the elderly comply more with tax legislation compared to younger citizens. Moreover, justice, confidence in the government, and perceived fairness of how public money is spent improve the willingness of taxpayers to comply with tax requirements. Along those lines, tax compliance increases when citizens believe that the tax and legal system are fair, clear and stable, and corruption is being effectively tackled [11] . In Latvia, legitimacy of the tax authorities and the government, national pride and perception of the danger and severity of punishment were found to be positively related to high tax ethics for business owners and managers [12] .

Finally, in a recent survey, in which data was collected from 35 Eurasian countries, tax ethics is higher in rich countries, in countries which have increased public revenues and expenditures, in countries with a fair and clear legal system and in countries with a low level of social inequality and corruption. Moreover, citizens of higher education and citizens with children have a higher sense of tax compliance [13] .

The purpose of this paper is to examine the perceptions of Greek taxpayers regarding tax evasion and to explore the circumstances under which tax evasion is accepted or considered acceptable. Moreover, we will compare the results of our survey with those of other countries and highlight the differences between the tax ethics of Greek citizens and those of citizens of other countries. A quantitative approach methodology was selected for this study. The participants were contacted via social media and email and were requested to answer an online questionnaire. The questionnaire used in this paper has been developed by Professor McGee and has been used as a research tool in various studies ( [1] [14] - [22] ). The questionnaire is still used in academic research [23] . In the first part of the questionnaire, participants were asked to respond to questions regarding demographic characteristics such as gender, occupational status, and level of education, marital and financial status. Then, they were asked to express their level of agreement/ disagreement to statements regarding tax evasion at a seven-step Likert type scale. The scale was rated as: 1-absolutely agree, 2-agree, 3-almost agree, 4-I am indifferent, 5-I almost disagree, 6-I disagree, 7-I totally disagree.

Tax evasion is an economic and social phenomenon that has always been in the centre of public policy. Taxpayers commit tax evasion when they belief that public money is not allocated efficiently from the government to the citizens. Consequently, transparency is of outmost importance to taxpayers in order for them to believe that their contribution to public income is important and necessary. Therefore, it is very important for the state to have a legal framework that holds politicians accountable for their decisions and actions regarding the management of public money. Rebuilding the trust between the government and the citizens is perhaps the only solution to tackle tax evasion and this is where the current political system should focus its efforts on.

Comparing the results of our study with those of similar studies in other countries, we observe that there are no significant differences in the way tax ethics is being perceived by the citizens. Perhaps the only noticeable difference between Greece and the majority of the other countries analyzed in the present study is the fact that tax ethics receives higher mean values in all the questions regarding discrimination, which means that Greek citizens do not associate tax obligations with human rights and how the government interacts with citizens from different countries.

The current research instrument has been used to measure tax ethics is Greece for the first. We propose that further research should be conducted in order to make generalizations about this study’s subject. The main constraint and limitation of the current research is the bias of the survey respondents. Future research should focus on a qualitative approach to understand the underlying factors that lead citizens to tax evasion. For example, in-depth interviews of different population groups could contribute into further understanding how tax evasion manifests itself in different social contexts.

Drogalas, G., Anagnostopoulou, E., Pazarskis, M. and Petkopoulos, D. (2018) Tax Ethics and Tax Evasion, Evidence from Greece. Theoretical Economics Letters, 8, 1018-1027. https://doi.org/10.4236/tel.2018.85070