How Do Wars Make States? Trust and Tax Compliance in Wartime Ukraine

• In Event: Society, Regimes and the Military

Abstract

How Do Wars Make States? Institutional Trust and Attitudes toward Tax Compliance in Wartime Ukraine
Marc P. Berenson and Sarah Birch
King’s College London

War, states and taxes have long been linked. Leaders need funds to wage war, and this spurs them to build administrative infrastructures that enable them to tax their populations effectively. Less is known about how citizens respond to these efforts during wartime. This paper draws on a series of cross-sectional surveys carried out in Ukraine in 2020, 2022 and 2023 to probe the impact of the Russian invasion of February 2022 on institutional trust - citizen trust in the state - and attitudes toward taxation. Using a difference-in-differences approach for identification, we find that the war spurred institutional trust, but that attitudes and behavioral dispositions related to the tax regime shifted less noticeably. We also find lower levels of both institutional trust and willingness to pay taxes in the regions most acutely affected by conflict.

The core state functions of taxation and defense have an intimate history, and exercise of these dual functions is often seen as one of the main drivers of state-building in the modern era. Charles Tilly is famous for having claimed that “war made states” (Tilly 1992), as the high costs of waging war drove rulers to construct institutions of taxation and civil administration in order fund their military expenditures. Yet this story is one that plays out over decades or centuries. We know far less about short-term shifts in citizen support for state institutions during wartime.

This is an important question, as short-term shifts in attitudes toward the state are particularly important at times of war, when the state relies on citizens both to fight and to finance military campaigns. The cost of waging war typically requires a state to increase taxes and boost tax compliance, and citizens have historically bargained with their leaders over levels of fiscal extraction and the conditions under which they will be taxed (Levi 1988; Tilly 1992). Citizen attitudes toward the state during wartime thus play a crucial but understudied role in facilitating the bellicist trajectory of state development.

As such, the study of state development through war to date leaves several unanswered questions that we seek to answer in this paper: To what extent does an attack by a foreign power increase citizen support for state institutions? How long does the effect of such an attack last? Do increases in institutional trust translate into behavioral propensity to support the state (and the war effort) through the payment of taxes? The ultimate question we aim to analyze is whether the war has opened up an opportunity for such a transformation in institutional trust and tax compliance. If this is the case, this indicates a more thorough change in the relationship between the state and the people than a transient war-time rally effect.

The paper leverages a series of surveys carried out before and during the 2022 Russian invasion of Ukraine to address these questions. These data, collected in 2020, 2022 and 2023, provide a unique opportunity to probe the way in which conflict affects attitudes toward the state in general and toward the fiscal apparatus that supports the war effort. We refer in addition to data from similar surveys fielded in 2010, 2012 and 2015. These six surveys included a number of identically worded questions on institutional trust, attitudes toward taxation and behavioral propensities in this domain.
We find that trust in Ukrainian institutions rose markedly after the onset of the 2022 war and remained at elevated levels relatively to the pre-war context, but that this rise was less pronounced on some measures in regions most affected by conflict. Our findings also indicate that attitudes and behavioral propensities linked to taxation responded less to conflict than general expressions of support for the Ukrainian state, and there is also evidence of lower willingness to pay taxes in areas most severely affected by conflict.

Descriptive results from the pre- and post-invasion surveys also provide strong support for the supposition that the trust that Ukrainian citizens evinced in their state increased following the Russian invasion of February 2022. It is also noteworthy that the regions where the initial rise in trust was highest were those that experienced high levels of conflict in both 2022 and 2023 – the south and the east of Ukraine – due to the fact that these areas exhibited the lowest initial trust levels in 2020. This suggests that, despite its devastating impact on many aspects of life in Ukraine, the Russian invasion did serve to bolster trust in the Ukrainian state precisely in the areas where it most needed to be bolstered in order to consolidate the relationship between the Ukrainian state and the Ukrainian people.

Authors

• Marc P. Berenson, King's College London

• Sarah Birch, King's College London