|Title:||Trust and power as predictors to tax compliance: Global evidence|
Vol. 12, No 2, 2019
Published date: 06-2019 (print) / 06-2019 (online)
Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Universiti Utara Malaysia
Nor Aziah Abd Manaf
Universiti Utara Malaysia
Universiti Utara Malaysia
|Keywords:||power, slippery slope framework, tax compliance, trust|
|JEL classification:||H20, H24, H25, H26|
Slippery Slope Framework has attracted exceptional attention from researchers in economic psychology and taxation field through validation by renowned scholars via variety of surveys and experimental designs. However, application of cross-sectional analysis in validating the framework has been scant, the available studies being focused on a single continent only. This study aims to test the assumptions of “Slippery Slope Framework” through examination of the influence of trust in authorities and power of authorities on tax compliance globally. The sample of 158 countries was selected as of 2016. Data was analyzed through Ordinary Least Squares Regression Analysis. The results reveal that trust in authorities significantly influences tax compliance, but power of authorities does not. Additionally, the interaction effect of trust and power on tax compliance has not been established through this cross-country analysis. Practically, the results suggest that authorities should ensure judicious use of taxpayer monies in the provision of public goods and services, and also fairness and equity among taxpayers. Eventually, these will enhance trust and improve tax compliance. Theoretically, the study calls for disaggregation analyses where each continent will be studied individually for replication of these findings and establishing the interaction effect wherever possible.
1. Andyarini, K. T., Subroto, B., & Subekti, I. (2019). The Influence of Cooperative Taxpayers' Trust and the Power of Tax Authority on Cooperatives Taxpayer Compliance. In 5th Annual International Conference on Accounting Research (AICAR 2018). Atlantis Pre
2. Allingham, M. G., & Sandmo, A. (1972). Income Tax Evasion:A Theoretical Analysis Journal of Public Economics, 1, 323-338.
3. Ayuba, A., Saad, N., & Ariffin, Z. Z. (2018). Testing the Assumptions of Slippery Slope Framework on Tax Compliance: Evidence from Nigerian SMEs. DLSU Business & Economics Review, 27(2) 166-178.
4. Bandura, A. (1991). Social cognitive theory of self-regulation. Organizational Behavior and Human Decision Processes, 50(2), 248-287.
5. Batrancea, L., & Nichita, R.-A. (2014). A Bird’S Eye View On Citizens’ Trust In And Power Of Tax Authorities In East And South Asia. Annals-Economy Series, 1, 192-202.
6. Benk, S. & Budak, T. (2012). Power and trust as determinants of voluntary versus enforced tax compliance: Empirical evidence for the slippery slope framework from Turkey. African Journal of Business Management, 6(4), 1499-1505.
7. Brewster, D. R. (1998). A Theory of Trust: An Exposition of Francis Fukuyama's "Trust" The Annual Meeting of the Southwestern Sociological Association.
8. Central Intelligence Agency. (2017). World Facts Book. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html (Accessed 7th April, 2017)
9. Cohen, J. (1988). Statistical power analysis for the behavioral sciences. 2nd ed. Hillsdale: Lawrence Erlbaum Associates, NJ.
10. Curran, P.J. West, S.G. & Finch J.F. (1996). The robustness of test statistics to normality and specification error in confirmatory factor analysis, Psychological Methods, 1(1)16.
11. Damayanti, T. W., & Martono, S. (2018). Taxpayer Compliance, Trust, and Power. Jurnal Keuangan dan Perbankan, 22(2), 231-239.
12. da Silva, F. P., Guerreiro, R., & Flores, E. (2019). Voluntary versus enforced tax compliance: the slippery slope framework in the Brazilian context. International Review of Economics, 1-34.
13. Emerson, R. M. (1976). Social exchange theory. Annual Review of Sociology, 2(1), 335-362.
14. Faizal, S. M., Palil, M. R., Maelah, R., & Ramli, R. (2017). Power and Trust as Factors Influencing Tax Compliance Behavior in Malaysia. Asian Journal of Accounting and Governance, 8, 79-85.
15. Feld, L. P., & Frey, B. S. (2007). Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation. Law & Policy, 29(1), 102-120.
16. Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications.
17. Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2018). When to use and how to report the results of PLS-SEM. European Business Review, (just-accepted), 00-00.
18. Jackson. B.R., and Milliron, V.C. (1986). Tax compliance research: Findings, problems, and prospects. Journal of Accounting Literature, 5, 125-65.
19. Jeon, J. (2015). The strengths and limitations of the statistical modeling of complex social phenomenon: Focusing on SEM, path analysis, or multiple regression models. Int J Soc Behav Educ Econ Bus Ind Eng, 9(5), 1594-1602.
20. Kastlunger, B., Lozza, E., Kirchler, E., & Schabmann, A. (2013). Powerful authorities and trusting citizens: The Slippery Slope Framework and tax compliance in Italy. Journal of Economic Psychology, 34, 36-45. doi: http://dx.doi.org/10.1016/j.joep.2012.11
21. Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues World Bank Policy Research Working Paper No. 5430. Retrieved from SSRN: http://ssrn.com/abstract=1682130
22. Kirchler, E., Hoelzl, E., & Wahl, I. (2008). Enforced versus voluntary tax compliance: The “slippery slope” framework. Journal of Economic Psychology, 29(2), 210-225. doi: http://dx.doi.org/10.1016/j.joep.2007.05.004
23. Kogler, C., Batrancea, L., Nichita, A., Pantya, J., Belianin, A., & Kirchler, E. (2013). Trust and power as determinants of tax compliance: Testing the assumptions of the slippery slope framework in Austria, Hungary, Romania and Russia. Journal of Economi
24. Kogler, C., Muehlbacher, S., & Kirchler, E. (2015). Testing the “slippery slope framework” among self-employed taxpayers. Economics of Governance, 16(2), 125-142.
25. Lisi, G. (2011). Job search theory and the slippery slope framework: an attempt to integration (No. 2011-02).
26. Mardhiah, M., Miranti, R., & Tanton, R. (2019). The Slippery Slope Framework: Extending the Analysis by Investigating Factors Affecting Trust and Power. CESifo Working Paper No. 7494. Available at SSRN: https://ssrn.com/abstract=3338850
27. Mas' ud, A., Manaf, N. A. A., & Saad, N. (2015). Testing assumptions of the" Slippery Slope Framework" using cross-country data: evidence from Sub-Saharan Africa. International Journal of Business and Society, 16(3), 408.
28. Mas’ud, A., Manaf, N. A. A., & Saad, N. (2014). Do trust and power moderate each other in relation to tax compliance? Procedia-Social and Behavioral Sciences, 164, 49-54.
29. Muehlbacher, S., & Kirchler, E. (2010). Tax compliance by trust and power of authorities. International Economic Journal, 24(4), 607-610.
30. Muehlbacher, S., Kirchler, E., & Schwarzenberger, H. (2011). Voluntary versus enforced tax compliance: empirical evidence for the “slippery slope” framework. European Journal of Law and Economics, 32(1), 89-97.
31. Pallant, J. (2001). SPSS Survival Guide: A step by step guide to data analysis using SPSS. Australia: Allen & Unwin.
32. Pallant, J. (2005). SPSS survival guide. Crow's Nest, NSW: Allen & Unwin.
33. Pellizzari, P., & Rizzi, D. (2014). Citizenship and power in an agent-based model of tax compliance with public expenditure. Journal of Economic Psychology(0). doi: http://dx.doi.org/10.1016/j.joep.2012.12.006
34. Prinz, A., Muehlbacher, S., & Kirchler, E. (2014). The slippery slope framework on tax compliance: an attempt to formalization. Journal of Economic Psychology, 40, 20-34.
35. Siglé, M., Goslinga, S., Speklé, R., van der Hel, L., & Veldhuizen, R. (2018). Corporate tax compliance: Is a change towards trust-based tax strategies justified?. Journal of International Accounting, Auditing and Taxation, 32, 3-16.
36. Silvani, C., & Baer, K. (1997). Designing a tax administration reform strategy: experiences and guidelines.
37. Srinivasan, T. N. (1973). Tax evasion: A model. Journal of public economics, 2(1973), 339-346.
38. Torgler, B. (2002). Speaking to theorists and searching for facts: Tax morale and tax compliance in experiments. Journal of Economic Surveys, 16(5), 657-683.
39. Torgler, B. (2003). Tax morale and institutions. Available at SSRN 663686.
40. Torgler, B., & Schneider, F. (2009). The impact of tax morale and institutional quality on the shadow economy. Journal of Economic Psychology, 30(2), 228-245. doi: http://dx.doi.org/10.1016/j.joep.2008.08.004
41. Torgler, B., Demir, I. C., Macintyre, A., & Schaffner, M. (2008). Causes and consequences of tax morale: An empirical investigation. Economic Analysis and Policy (EAP), 38(2), 313-339.
42. Torgler, B., Schaffner, M., & Macintyre, A. (2007). Tax compliance, tax morale, and governance quality. International Studies Program Working Paper, Andrew Young School of Policy Studies, Georgia State University.
43. Transparency International. (2017). Corruption Perception Index 2016. http://www.transparency.org/cpi2016
44. Wahl, I., Kastlunger, B., & Kirchler, E. (2010). Trust in Authorities and Power to Enforce Tax Compliance: An Empirical Analysis of the “Slippery Slope Framework”. Law & Policy, 32(4), 383-406.
45. West, S.G., Finch, J.F., &Curran, P.J. (1995). Strictural equation models with nonnormal variables. Structural Equation Modelling: Concepts, Issues, and Applications, 56-75.
46. World Bank Group. (2017). Worldwide Governance Indicators. Retrieved from http://info.worldbank.org/governance/wgi/index.aspx#home