Abstract
Tax evasion in most developing countries is so widespread and development is much exacerbate by the fact that not many of these countries have made an effort to measure the ethical reasons that taxpayers give. This study, therefore, is designed to describe the ethics tax evasion in Dessie town administration, Ethiopia by taking evidence from 336 randomly selected self-employed taxpayers through a 7 point likert scale questionnaire. Accordingly, this study result shows that tax evasion is ethical in certain situations, and sometimes it is unethical in some other situations. The top mean score ranked arguments that taxpayers gave to justify tax evasion include government corruption, unfair tax system, government discrimination against political affiliation, tax un-affordability, when the money collected is wasted, and high tax rate. In contrary, tax evasion is not ethical when most of the money collected is spent wisely, if the money collected is spent on worthy projects, when the money collected is spent on projects that do benefit taxpayers, and when the money collected is spent on projects that do not benefit taxpayers. The other finding of this study is that the ethics of tax evasion is different among gender, as well as over academic status of the respondents. Females oppose tax evasion than male i.e. females are more ethical than male. Likewise, educated are more ethical than uneducated, this is with the view that tax evasion is unethical. In general, the overall finding of this study indicated that the government should aware the taxpayers that there is proper administration, fair tax system and money collected are spent wisely.
Highlights
Much of the failure to finance development spending – the failure of wealthy donor countries to provide promised increases in aid budgets– is a failure of political will
Tax evasion is ethical if a significant portion of the money collected winds up in the pockets of corrupt politicians or their families and friends
Tax evasion is ethical even if a large portion of the money collected is spent on projects that do benefit me
Summary
Much of the failure to finance development spending – the failure of wealthy donor countries to provide promised increases in aid budgets– is a failure of political will. Scholars argued on the need of understanding the ethics of tax evasion by taxpayers that when required revenue for smooth operation cannot be raised, countries often times resort to increase tax rates or borrowings which may crowd out the private sector of their economies and lead them to debt traps. One of the major keys to successfully reduce tax evasion activities is to first and foremost understand the behavior of taxpayers and the reasons that cause such specific behaviour. Cultural differences are one of the factors that affect an individual moral decision making or influence their perception regarding ethics on tax evasion. To the best of researcher’s knowledge, no prior empirical study has been found that investigates the issue of the ethics of tax evasion in this area
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