ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

A Study on the Effects of Tax Rate Change on Tax Compliance

  • Yoo, Byung-Kwan Gachon University Graduate School

Asian Tax Journal Vol. 15 No. 5 (2014), pp. 219-261

Abstract

The pupose of this study is to analyze the influence of variables of tax rate policies on the levelof tax compliance. To reach the objective of this research I reviewed the press in relation to taxrate policy and tax compliance, various papers and more as evidence along with theoretical study,did a survey targeting the four groups(taxpayers, tax and accounting professionals, revenue officer)about the level of tax rate(income and corporate tax rate), tax consciousness credibility of taxadministration, level of tax compliance, policies on improvement of tax administration andquestions regarding the characteristics of demographics and collected 418 responses applying themto the analysis. To summarize the results of this research：First, after verifying the effect of income and corporate tax rate(which are one of the tax policyvariables called the level of tax rate) on tax consciousness, income tax rate effect on the taxconsciousness towards negative direction but corporate tax rate did not effect on the taxconsciousness. Second, verifying the effect of income and corporate tax rate(which are one of thetax policy variables called the level of tax rate) on tax consciousness showed that although thestandard of income tax rate effects the credibility of tax administration, the standard of corporatetax rate does not effect the credibility of tax administration. Third, verifying the effect of taxconsciousness and the credibility of tax administration both tax consciousness and the credibilityof tax administration effects the level of tax compliance. Fourth, verifying mediated effect of taxconsciousness among the tax policy variable showed that tax consciousness does not play its roleas a mediator having no influence on the relation between the tax policy variable and the level oftax compliance. Fifth, verifying the tax policy variable called the level of tax rate showed thatalthough income tax rate is mediated by the credibility of tax administration, the credibility of taxadministration does not have any mediated effect on the corporate tax rate reaching the result thatthere is a difference in the tax policy variable partly depending on the credibility of taxadministration. Sixth, analyzing the difference of the level of tax compliance among the tax policy variable called the level of tax rate and the form of enterprise(individual business and corporateincome taxpayers) showed that depending on the form of enterprise it does not have a notable effect on the level of tax compliance which can be analyzed that the level of tax compliance doesnot change between the form of enterprise of individual business and corporate income taxpayers. Seventh, verified whether or not the effect of the tax policy variable called the level of tax ratediffers on the occupational cluster of the earnings taxpayer and tax practician, it did not show anotable difference between the occupational cluster of earnings taxpayer and tax practicianstatistically appearing that tax practician is more aware of income tax and that earnings taxpayeris more aware of corporate tax.

Keywords

  • tax rate policy
  • level of tax rate
  • tax compliance
  • tax consciousness
  • credibility of tax administration

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