Not Only Fines: The Impact of Financial and Shame Penalties on Tax Evasion

Sabina Kołodziej; Małgorzata Niesiobędzka

doi:10.18290/rpsych2025.0005

Published : 2025-12-02

No. Online First

Not Only Fines: The Impact of Financial and Shame Penalties on Tax Evasion

Sabina Kołodziej

https://orcid.org/0000-0002-7467-1048

Małgorzata Niesiobędzka

https://orcid.org/0000-0003-4303-5361

DOI: https://doi.org/10.18290/rpsych2025.0005

Abstract

In this paper, we consider the impact of financial and social penalties on the propensity to evade taxes. Apart from financial fines, social penalties, such as social disapproval, may result from an illegal tax decision. Rigorous social norms regarding payment of taxes impose additional costs on violators such as fear of exclusion and stigmatization. We conducted an experiment among Polish taxpayers (N = 303) on the effect of single and combined financial and shame penalties on propensity to evade taxes. Results of the study confirmed that taxpayers respond not only to economic penalties, but are aware that tax evasion may also be associated with other, non-economic costs. The threat of social disapproval for illegal tax reduction may serve as an additional factor preventing individuals from breaking social and legal norms regarding tax evasion. Social consequences of dishonest tax behavior have rarely been analyzed in the literature so far.

Keywords:

tax evasion, non-financial penalty, financial penalty, shame, tax administration

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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