Higher Tax Compliance Research Articles

Cooperating Estonians and “exiting” Lithuanians: trust in times of crisis

This article argues that substantial differences in political legitimacy can help explain why Estonia dealt with the recent economic crisis more successfully than Lithuania. In 2009, when the crisis hit hardest, Lithuania saw its budget deficit expand substantially, while Estonia managed to keep the deficit under 3% of GDP and consequently was invited to join the Eurozone, to which it acceded in 2011. The experience of these countries presents an interesting puzzle, as the divergent fiscal performance cannot be attributed to purely economic factors. Both countries have a similar economic structure, and both were similarly affected by the crisis. Furthermore, both pursued similar expenditure and tax policies during the crisis. Based on quantitative and qualitative evidence, it is argued that higher tax compliance and subsequently higher tax revenues can explain the difference. In turn, this compliance gap can be attributed to different levels of trust in political institutions in Estonia and Lithuania.

Vox Clamantis in Deserto: The Role of the Individual in Forging a Strong Duty to the Tax System

The United States is blessed with a prevailing social norm of high tax compliance. However, a number of strong forces are currently placing that norm in jeopardy. This essay reviews the process by which social norms change and the characteristics evidenced by “contagious” social norms. It then considers the important role individual action can plays in creating and maintaining a social norm of tax compliance and how individuals can be encouraged to embrace and propagate this norm. Particular emphasis is placed on 1) ways that a taxpaying social norm can be molded to make it more contagious among individuals and 2) the means of coopting important trendsetter groups into supporting the norm.

Addressing the small business tax compliance burden: Evidence from South Africa

Small businesses have the potential to grow the economy, generate jobs and reduce poverty, but they face many constraints including high tax compliance costs and burdens. A comparison of the findings and recommendations made in small business tax compliance cost studies conducted in South Africa with initiatives introduced by the South African Revenue Service (SARS), substantiated by consultations with a SARS and a South African Institute of Chartered Accountants official, reveals that SARS has, in most cases, attempted to address the tax compliance burdens identified in these studies. However, SARS has only partially addressed the complexity of the tax law, the lack of software to assist small businesses with their record-keeping and the compliance burden associated with provisional tax. SARS has failed to address the need for a threshold below which no small business tax return is required to be submitted, the inclusion of tax in the school syllabus, the requirement for first-time offenders to attend courses instead of raising penalties and the need for a reduction in the rates of interest and penalties raised by SARS. These initiatives should be considered by SARS and it is recommended that further research into the success and effectiveness of all the initiatives already introduced by SARS be performed.

Addressing the small business tax compliance burden: Evidence from South Africa

Small businesses have the potential to grow the economy, generate jobs and reduce poverty, but they face many constraints including high tax compliance costs and burdens. A comparison of the findings and recommendations made in small business tax compliance cost studies conducted in South Africa with initiatives introduced by the South African Revenue Service (SARS), substantiated by consultations with a SARS and a South African Institute of Chartered Accountants official, reveals that SARS has, in most cases, attempted to address the tax compliance burdens identified in these studies. However, SARS has only partially addressed the complexity of the tax law, the lack of software to assist small businesses with their record-keeping and the compliance burden associated with provisional tax. SARS has failed to address the need for a threshold below which no small business tax return is required to be submitted, the inclusion of tax in the school syllabus, the requirement for first-time offenders to attend courses instead of raising penalties and the need for a reduction in the rates of interest and penalties raised by SARS. These initiatives should be considered by SARS and it is recommended that further research into the success and effectiveness of all the initiatives already introduced by SARS be performed.

Determinants of Tax Compliance in Small and Medium Enterprises in Zimbabwe

his research investigated the determinants of tax compliance in small and medium enterprises (SMEs), focusing on how tax knowledge and compliance costs affected tax compliance behaviour of SMEs in Zimbabwe for the tax period 2009 to 2011. The main objectives of the study were to investigate how the unique business conditions of SMEs, the perceptions of SME operators towards taxation, levels of tax knowledge and compliance costs affect tax compliance of SME taxpayers. To achieve these objectives, research propositions were stated which mainly stipulated that the current tax system in Zimbabwe does not cater for the special business needs of SMEs and that strong correlations do exist among tax knowledge, compliance costs and tax compliance. The study adopted a chiefly qualitative research design. Methodological triangulation was employed, utilizing the interview method and a questionnaire survey to collect primary data from SMEs in Harare, Chitungwiza and Bindura. Interview responses were analyzed through summative content analysis and questionnaire responses were analyzed using SPSS software (V. 16.0). The results indicated that SMEs face different business conditions from large companies which cause them to bear high tax compliance burdens. The results also indicated that the perceptions of SME operators about tax fairness, tax service quality and government spending priorities greatly affect their tax compliance decisions. Tax knowledge was discovered to have no correlation with tax registration compliance but weak negative correlations with filing compliance. Compliance costs were discovered to have negative correlations with tax compliance. The study then recommended that the current tax law should be amended to incorporate provisions that grant special tax incentives to SMEs in order to improve voluntary tax compliance by SME taxpayers. The study also recommended that the Zimbabwe Revenue Authority (ZIMRA) should disseminate information on tax updates more frequently in order to improve the levels of tax knowledge for voluntary tax compliance.

A critical analysis of the barriers to entry for small business owners imposed by Sections 12E(4)(a)(iii) and (d) and paragraph 3(b) of the Sixth Schedule Of The Income Tax Act, No. 58 of 1962

According to National Treasury’s Explanatory Memorandum on the Revenue Laws Amendment Bill, 2008, small businesses in South Africa are instrumental in the growth of the South African economy as they are a source of job creation and a counter to poverty. Research, however, indicates that small businesses face many obstacles, such as relatively high tax compliance costs. It was, therefore, proposed in the 2008 Budget Review that a turnover tax system be implemented for micro businesses with a turnover of up to R1 million per annum to simplify the tax compliance process. Similarly, section 12E was introduced earlier in the Income Tax Act No. 58 of 1962 to offer additional income tax relief to small business owners. Sections 12E(4)(a)(iii) and (d) and paragraph 3(b) of the Sixth Schedule, however, prevent certain small business owners from making use of these concessions. This article investigates these barriers to entry and explores possible solutions to the problems presented by them.

Good Environment for Tax Compliance: Comparative Studies of Underdeveloped, Developing and Developed Countries

This paper attempts to study factors that could be considered as a good environment for tax compliance of the selected groups of countries for under developed, developing and developed countries. Selected factors used in our study are deemed to be factors that could enhance the confidence of taxpayers in complying with the taxation system. This includes degree of corruption amongst the public servants, public trust towards the ruling government, economic growth rate and ethical values. Empirically, the study found that factors such as less corruption, high ethical standards amongst the public servants, increased public confidence in government, inclusive of tax authorities and continuous economic growth could be a good environment of high tax compliance. The variables used are said to have a direct influence on taxpayers’ behaviors and tax evasion practices.The evidence presented in the study would help the government to make an improvement in governing the country for the economic development through tax revenue collection and for political millage.

War and garrison towns in the Dutch Republic: the cases of Gorinchem and Doesburg (c. 1570–c. 1660)

ABSTRACTThis article examines three important aspects of how the Dutch Republic organized warfare during the Dutch Revolt. The regulations for the billeting of soldiers, the building of fortifications and the collection of direct taxes are analysed in two garrison towns, namely, Gorinchem and Doesburg. The billeting of soldiers and the collection of taxes usually caused troubles in neighbouring countries. In comparison to more centralized neighbouring countries, the Dutch polity's decentralized nature, in which cities held positions of strong power, entailed better arrangements for billeting and higher tax compliance. Yet this decentralized nature did not hamper the emergence of central administrative bodies for co-ordinating and organizing the building of fortifications. The Dutch account of organizing warfare challenges existing views about the role of cities in state building within a context of protracted warfare.

Discussion of Ultimate Ownership, Income Management, and Legal and Extra‐Legal Institutions

Journal of Accounting ResearchVolume 42, Issue 2 p. 463-474 Discussion of Ultimate Ownership, Income Management, and Legal and Extra-Legal Institutions PETER D. WYSOCKI, PETER D. WYSOCKI Sloan School of Management, Massachusetts Institute of Technology.Search for more papers by this author PETER D. WYSOCKI, PETER D. WYSOCKI Sloan School of Management, Massachusetts Institute of Technology.Search for more papers by this author First published: 15 April 2004 https://doi.org/10.1111/j.1475-679X.2004.00145.xCitations: 75 I thank Peter Joos and Christian Leuz for helpful comments. AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume42, Issue2May 2004Pages 463-474 RelatedInformation

Tax compliance within the context of gain and loss situations, expected and current asset position, and profession

This study on 60 self-employed and 59 business entrepreneurs investigates self-reported tax evasion within the context of taxpayers' previous expected tax payments at filing time (payment or refund), their asset position (expected versus current asset position), and their tax category (self-employed versus business entrepreneurs). It examines whether different tax categories have an impact on the habitual decision-making framework and hence influence the reference point employed in the decision process. The results indicate that for the self-employed in the study an unexpected surprise payment leads to low tax compliance, whereas an unexpected surprise refund leads to high tax compliance. Thus, their self-reported tax compliance can be best described by the current asset position. By contrast, the reference point business entrepreneurs employ in making tax decisions can be best described as dictated by their expected asset position. As a result, expected payments are associated with low and expected refunds are associated with high tax compliance on the part of these individuals. In addition, the findings of the study showed that knowledge of the legal principles of Austrian tax law is correlated with tax morality, and that women are less compliant than men. Attitudes towards the tax system and the perceived justice of the system are not correlated significantly with self-reported tax evasion.