Trust in Public Inistitutions and Distributive Tax Justice in Azerbaijan

Abstract

This thesis examines how trust in public institutions influences perceptions of distributive tax justice in Azerbaijan, focusing on the principle of taxing the rich and subsidize the poor. In doing so, the study distinguishes between input-side and output-side institutions. Input-side institutions include organizations such as government and parliament. Output-side institutions consist of police, courts, and civil services. The thesis collects data from the World Values Survey (2010-2014). It utilizes an Ordered Probit Model for analysis. The findings indicate that trust in parliament strongly enhances support for distributive tax justice, underscoring the importance of representative institutions. By contrast, trust in courts and government shows no consistent impact, while trust in the police is negatively associated with redistributive preferences. Moreover, a novel finding emerges in relation to civil services: greater trust in these institutions corresponds with weaker support for distributive tax justice, suggesting a divergence between bureaucratic credibility and demands for progressive taxation. From a theoretically standpoint, the study advances understanding by showing that higher institutional trust does not automatically translate into support for redistribution, thereby challenging conventional tax morale theories. Furthermore, it also demonstrates that there is no single, universally applicable conceptual framework for examining trust in public institutions and distributive tax justice. The effects are context-dependent and vary across institutions. They may even reverse due to issues such as endogeneity. Accordingly, each country must therefore adapt its own framework to reflect its institutional realities. In term of policy, the implications emphasize the importance of effectively utilizing the taxpayer’s trust in public institutions when the tax administration designs a progressive taxation system aimed at achieving vertical justice in Azerbaijan.