Trust in government and tax compliance; the mediating role of tax justice perception
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Date
2023
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KNUST
Abstract
This study aims to explore the intricate interplay between trust in government, tax justice perception and tax compliance among small and medium-sized enterprises (SMEs) in Ghana. Tax compliance is a crucial aspect of governance and revenue collection, and this research delves into the often-overlooked non-economic factors that influence it. By examining how trust in government impacts tax justice perception and, in turn, tax compliance, this study sheds light on essential aspects of tax compliance. The research findings underscore the pivotal role of trust in government in shaping tax compliance behavior among SMEs. Trust fosters a perception of fairness within the tax system and encourages citizens to willingly fulfill their tax obligations. Conversely, a lack of trust can lead to disillusionment and decreased motivation for tax compliance The study reveals a significant connection between trust in government and tax justice perception. Trust serves as a catalyst, shaping perceptions of tax justice and reinforcing notions of fairness, legitimacy, and accountability within the tax system. Positive perceptions of tax justice motivate SMEs to comply with tax laws, while negative perceptions can deter compliance. The study uncovers a profound link between tax justice perception and tax compliance among SMEs. Those who perceive the tax system as just and fair are more inclined to fulfill their tax obligations willingly. This positive perception fosters a sense of responsibility and duty, contributing to higher tax compliance rates. The research elucidates the mediating role of tax justice perception in the relationship between trust in government and tax compliance. Trust in government influences tax compliance through its impact on tax justice perception. When trust is present, it fosters positive perceptions of tax justice, encouraging tax compliance. Conversely, a lack of trust leads to negative perceptions of tax justice and reduced compliance. The study provides valuable insights into the dynamics of trust in government, tax justice perception, and tax compliance among SMEs in Ghana. It highlights the importance of building and maintaining trust in government to promote tax compliance and emphasizes the critical role of a fair and just tax system in maintaining high compliance rates. These findings offer recommendations for policymakers, SMEs, and future researchers, providing a nuanced understanding of the factors influencing tax-related behaviors and encouraging further exploration of this essential topic.
Description
A thesis submitted to the department of accounting and finance, institute of distance learning in partial fulfillment of the requirements for the award of the degree of master of science in accounting and finance