When Governments Deliver: Migrant Remittances and the Willingness to Pay Higher Local Taxes

Abstract

This article deviates from prior research which considers only national-level and formal taxes when examining tax attitudes and behaviours in migrant-sending countries. It investigates the relationship between the receipt of remittances and ‘conditional tax compliance’, and how it varies between the local and the national levels. The article posits that remittance recipients are willing to pay higher taxes at the local level in exchange for better services, but this willingness does not extend to higher levels of government. Data from the AmericasBarometer support this hypothesis: those receiving remittances show greater readiness to pay higher taxes for better municipal services. Statistical findings also reveal that recipients’ greater conditional tax compliance at the local level correlates with higher trust in municipal authorities, increased demand making on them, greater attendance of town hall meetings and closer engagement in community affairs, including making tax-like payments towards community-improvement activities. Contrariwise, at the national level, recipients of remittances display no greater willingness to pay higher taxes for welfare, no greater trust in state authorities, and lower participation in presidential elections. These findings suggest that a local perspective can provide deeper insights into the tax attitudes and behaviours of migrants and their families and the nature of state–society relations in migrant-sending countries.