The Effects of Taxpayers’Personal Ethics, Social Norm, Social Identification and Tax Investigation on their Tax Compliance
Asian Tax Journal Vol. 20 No. 3 (2019), pp. 9-42
Abstract
As the role of the government grows, tax compliances of taxpayers have been becoming very important. There have been many previous reports to improve tax compliance, however, a lot of research have focused on only extrinsic motivations such as tax investigations, tax rates and additional tax. Since taxpayers’ compliances are often high regardless of extrinsic motivations, the previous studies can not fully account for the phenomenon of taxpayer compliance. Thus, intrinsic motives such as personal awareness, social responsibility and other non－financial motives that encourage taxpayers to voluntarily comply with taxes, should be considered as well as extrinsic motivations. Here, this study proposed a comprehensive model of tax compliance by using various factors of tax compliance based on both intrinsic and extrinsic motivations to completely understand the phenomenon of taxpayer compliance. This study set representative variables as ‘personal ethics’, ‘social norm’ and ‘social identity’ for intrinsic motivation, and ‘the likelihood of taxation investigation’ for extrinsic motivation, respectively. Especially, ‘the likelihood of taxation investigation’ is the most consistent variable of extrinsic motivation according to the previous studies. Thus, we try to investigate how both intrinsic and extrinsic motivations affect for taxpayers to comply with taxes. In this study, the questionnaires was used to collect data. First of all, the intrinsic motives of the taxpayers were measured. Next, It was analyzed how respondents decide the tax reporting decision depending on the different two levels of external motivations；(1) high possibility of tax investigation (2) low possibility of tax investigation. Respondents were targeted to 500 Tax accountants and CPA members and 500 Business man for the questionnaire. Also, among Tax accountants and CPA, owner operator and corporate entrepreneurs who are more taxable and interested than non－taxpayers have been selected. Moreover, taxpayer are likely to affect tax compliance since a lot of taxpayers perform tax declaration through Tax accountants and CPA in Korea. Thus, taxpayer such as owner operator and corporate entrepreneurs were chosen as taxpayer in this study. A total of 133 respondents (59 taxpayers and 74 Tax accountants and CPA) were answered and analyzed as a result of sending 1000 questionnaires. The results of this study can be summarized as follows. First, personal ethics has a positive effect on tax compliance. Second, social ethics also has a positive effect on tax compliance. Third, the possibility of tax investigation affects tax compliance. Finally, it was found that the interaction variables of personal ethics, social ethics and tax investigation－positively affect tax compliance. This study has contributed to the comprehensive analysis of the motivation for tax compliance by using both intrinsic motivation and external motivation as variables. The result in this study would expected to help policymakers establish polices for improving tax compliance.
Keywords
- intrinsic motivation
- extrinsic motivation
- personal ethics
- social norm
- social identity
- tax investigation
- tax compliance
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