Tax Preferences under Criminal Governance

Organized criminal groups do not always oppose the state; in many cases, they collaborate with authorities to achieve shared objectives, such as maintaining peace and providing public goods. When criminal governance also entails public goods provision, the state faces a competitor in its core function. Thus, citizens may become less willing to pay taxes when public goods come from an alternative, non-state provider and non-tax resources. Criminal governance may thereby destroy the fiscal contract between citizens and the state. Research has to date largely focused on how the security dimension of criminal violence and its intensity might impact tax capacity and citizens' tax preferences. This study investigates the impact of public goods and service provision varying the source of provider – state, market and organized crime – on individual tax preferences. Using a series of survey experiments collected with an original online survey in Mexico, this study examines how exposure to coercion and public service provision by organized crime as opposed to the state and business organizations influences citizens’ willingness to pay higher taxes. Our findings contribute to a better understanding of the fiscal social contract under criminal governance.