Available Online at http://iassr.org/journal 2013 (c) EJRE published by International Association of Social Science Research - IASSR European Journal of Research on Education ISSN: 2147-6284 European Journal of Research on Education, 2014, 2(2), 82-93 DOI: 10.15527/ejre.201426251 82 The influence of demographic factors and risk aversion on tax morale: A multi-group analysis Cristina Sá a cristina.sa@ipleiria.pt, António Martins b , Carlos Gomes b, c a Polytechnic Institute of Leiria, School of Technology and Management, Campus 2, Morro do Lena - Alto do Vieiro, 2411-901 Leiria, Portugal b University of Coimbra, School of Economics, Av. Dias da Silva, 165, 3004-512 Coimbra, Portugal c ISR, Operations Management Group, Pinhal de Marrocos - Polo II, 3030 Coimbra, Portugal Abstract Tax morale has been recognized as the key to understand the levels of compliance achieved in most countries. We applied a structural equation model (SEM) to gain a better understanding about the factors shaping tax morale of Portuguese taxpayer’s. Our purpose was to analyse through SEM the direct effects of political democratic system, political participation, religiosity, individual satisfaction, trust in others and institutional trust on tax morale. SEM of tax morale allowed us to analyse the impact of demographic variables and risk aversion as determinants of tax morale through the use of multi-group analysis of structural invariance of SME developed. A sample of 1,553 Portuguese individual’s representative of Portuguese population obtained from European Values Study (EVS, 2010) was used. The results confirmed that Portuguese taxpayers´ tax morale is influenced by taxpayers trust on institutions like government, parliament and the judicial system, by political participation and by the belief that democracy is a good political system for governing the country. Tax morale is also influenced by individual´s satisfaction, by religiosity and by societal behaviour (trust in others). © 2013 European Journal of Research on Education by IASSR. Keywords: Tax morale, tax compliance, structural equation model, multi-group analysis 1. Introduction The reasons underlying taxpayers´ behaviour are not yet completely understood by researchers and by politicians. Tax morale is recognized has having an important role in explaining the high degree of tax compliance observed in many countries (Molero and Pujol, 2005). Tax morale is understood as the intrinsic motivation to comply with fiscal duties (Torgler, 2003). Torgler and Schneider (2005) defined it as the intrinsic motivation to comply and pay taxes, and thus voluntarily contribute to public welfare. A better understanding about individual heterogeneity in shaping tax morale may contribute for the development of alternative mechanisms to reduce tax evasion (Riahi-Belkaoiu, 2004; Lago-Peñas and Lago-Peñas, 2010) and to improve tax compliance. A comprehensive understanding of tax compliance should help decision-