Study on tax evasion perceptions in Australasia

Transcription

Study on tax evasion perceptions
in Australasia
Ranjana Gupta and Robert McGee*
Abstract
The authors conducted a survey of 967 undergraduate and graduate accounting,
business and economics, law and medical students and faculty in New Zealand drawn
from the Auckland area to determine their views on cheating on taxes (Study 1). The
survey instrument asked whether it was justifiable to cheat on taxes if you had a
chance. The survey instrument used a 10-point Likert scale that ranged from never
justifiable to always justifiable. Results were tabulated and comparisons were made
based on student status (graduate or undergraduate), academic major, gender, religion
and age to determine whether any of these demographic variables made a difference.
All the interaction effects between the variables were studied and were found to be
insignificant. The results were then compared to data from similar surveys of 2270
nonstudents conducted in Australia (Study 2) and New Zealand (Study 3) that used
different methodologies, had different sample populations and different demographics
to determine if the findings of Study 1 confirmed the data collected from those two
other surveys that used a different methodology and had different demographics.
The results suggest that there is some support for tax evasion and that demographic
variables do play a role.
*
Dr Ranjana Gupta CPA, Senior Lecturer,Taxation, Law School, Faculty of Business and Law,
Auckland University of Technology. Dr Robert W. McGee, Professor of Accounting and
Taxation, Florida International University.
We wish to express our thanks to Craig Elliffe, Professor of Taxation Law and Policy, The
University of Auckland and the anonymous referees for their critical advice on an earlier draft of
this paper which significantly improved this paper. Any remaining errors are naturally ours.
This paper was accepted for publication on 8 December 2010.
507
508 (2010) 25 AUSTRALIAN TAX FORUM
1
Introduction
Several empirical studies on tax evasion and other ethical issues have been conducted
in recent decades.1 Tax evasion studies have been conducted in number of countries.
A few of these studies have examined New Zealand and Australian taxpayers. Some of
those studies are discussed in more detail in the literature review section.
The motivation for the present study was to expand and deepen the literature
on ethical aspects of tax evasion and to analyze some demographic variables to
determine whether factors such as age, gender, etc. make a difference. Some prior
studies concluded that they did make a difference while other studies found that they
did not.2
This study, compares the results of our survey in New Zealand (Study 1) to the World
Values Survey in Australia (Study 2) and New Zealand (Study 3) that used different
methodologies, had different sample populations and different demographics to
determine if the findings of Study 1 confirmed the data collected from those two other
surveys that used a different methodology and had different demographics.
In Study 1 the authors distributed a survey to 967 undergraduate and graduate
accounting, business and economics, law and medical students and faculty in New
Zealand. The survey instrument asked whether it was justifiable to cheat on taxes if
you had a chance. The survey instrument used a 10-point Likert scale that ranged
from never justifiable to always justifiable. Results were tabulated and comparisons
were made based on student status (graduate or undergraduate), academic major,
gender, religion and age to determine whether any of these demographic variables
made a difference. The results were then compared to data from World Values surveys
of 2375 nonstudents conducted in Australia (Study 2) (1421 respondents) and New
Zealand (Study 3) (954 respondents). The results suggest that there is some support
for tax evasion and that demographic variables do play a role.
Tax evasion is not specifically defined in the Tax Administration Act 1994 (TAA
1994). In general terms, tax evasion is defined as intentional illegal behavior, or as
behavior involving a direct violation of tax law to escape to escape the payment of
tax.3
Following this introduction, Part 2 of this paper reviews the literature on tax evasion.
The emphasis of this review is on theoretical and empirical studies that have been
1
2
3
For examples, see the Literature review of the present study.
Y Song and TE Yarbrough, ‘Tax Ethics and Taxpayer Attitudes: A Survey’, (1978) 38(5) Public
Administration Review 442; BR Jackson and VC Milliron, ‘Tax Compliance Research: Findings,
Problems and Prospects’, (1986) 5 Journal of Accounting Literature 125; A Birch, T Peters, and
AJ Sawyer, ‘New Zealanders’ Attitudes Towards Tax Evasion: A Demographic Analysis’, (2003) l
9(1)New Zealand Journal of Taxation Law and Policy 65.
International Bureau of Fiscal Documentation (2001) International Tax glossary (4th ed.)
Amsterdam, Netherlands; IBFD Publications.
STUDY ON TAX EVASION PERCEPTIONS IN AUSTRALASIA
509
done on ethical aspects of tax evasion. Part 3 reports on the New Zealand survey
on tax evasion that was conducted in the Auckland area. Part 4 analyzes the World
Values survey data that was collected on New Zealand and Australia. Part 5 compares
the findings of the three studies. Part 6 offers concluding comments.
2
Review of the Literature
The literature on tax evasion may be subdivided into several subcategories.
2.1
Public Finance studies
One subcategory of studies might be labeled public finance studies. Those studies
view tax evasion in terms of revenue loss and tend to examine the amount of the
revenue loss, the reasons for the revenue loss and perhaps ways to reduce or minimize
the revenue loss. The present paper does not examine those studies.
2.2
Religion studies
A second subcategory of studies might be called theoretical or philosophical studies.
Those studies do not employ empirical or statistical techniques, but rather discuss the
reason why people evade taxes and the philosophical and theological reasons they use
to justify tax evasion on moral grounds. The present paper does not examine those
studies.
2.3
Empirical studies
The third group of tax evasion studies was empirical in nature. Those studies4 were
mostly surveys of various groups in various countries. A series of studies used a survey
instrument that was constructed based on the Crowe study, which identified several
arguments that had justified tax evasion over the prior 500 years. Fifteen statements
were based on the issues identified in the Crowe study.
Those studies generally found that tax evasion was more acceptable in cases where the
government was corrupt or engaged in human rights abuses, where tax rates were too
high or where the tax system was perceived as being unfair or where there was inability
to pay. There was also support for tax evasion if the government wasted the tax funds
or where taxpayers did not receive anything in return for their tax payments. The
weakest arguments justifying tax evasion were in cases where the taxpayer received
something in return for taxes paid. In some studies, women were more opposed to tax
4
RW. McGee, M Basic and M Tyler, ‘The Ethics of Tax Evasion: A Survey of Bosnian Opinion’,
(2009) 11(2) Journal of Balkan and Near Eastern Studies 197-207; RW. McGee and G. Cohn,
‘Jewish Opinion on the Ethics of Tax Evasion’, (2008) 11(2) Journal of Legal, Ethical and Regulatory
Issues 1-32; I. Nickerson, LP. Pleshko and RW. McGee, ‘Presenting the Dimensionality of an
Ethics Scale Pertaining to Tax Evasion’, (2009) 12(1) Journal of Legal, Ethical and Regulatory
Issues 1-14.
evasion. In other cases men were more opposed.5 A third group of studies found both
genders to be equally opposed to tax evasion. Cross and Shaw6 suggest that to the
extent that individuals successfully practice tax avoidance, the incentive and benefits
of evasion decrease.
Song and Yarbrough,7 in a United States field study, investigated taxpayers’
perceptions of tax ethics and attitudes. They examined perceptions of the seriousness
of tax evasion against eight other crimes. The findings from their study indicated
that 87 percent of respondents agreed with the statement that ‘tax dodging’ is an
offence, and that it hurts no one but the government. Most respondents in the study
did not rank tax evasion as particularly serious when compared to other crimes. They
also considered various demographics to see if there is any correlation between a
subject’s characteristic and tax ethics. The results indicate that income level, a sense
of alienation, general distrust of people, belief that others cheat, educational level
and lack of confidence in government, influences the tax ethics practiced by people
generally.
Jackson and Milliron8 reviewed tax compliance literature from 1970 to 1985. Their
study considered the impact of fourteen variables (age, gender, education, income
level, withheld income source, occupation, compliant peers, ethics, fairness,
complexity, IRS contact, sanctions, probability of detection, tax rates) that had been
linked to compliance behaviour of individuals and also highlighted the unresolved
issues. They found that female taxpayers were more conforming, conservative and
bound by moral restraints than their male counterparts and older taxpayers are
normally more compliant than younger taxpayers. They claimed that enhancing the
level of general fiscal knowledge improves tax compliance by means of more positive
taxation perceptions. In addition, increased knowledge of tax evasion opportunities
assists non compliance and had a negative influence on tax compliance. However, the
study focused on studies originating from the United States.
Richardson and Sawyer reviewed all tax compliance literature from 1986 to 1997
regardless of the country of origin. Besides examining fourteen variables identified in
Jackson and Milliron’s9 study five additional variables (compliance costs, tax preparer,
framing, positive inducements and tax amnesties) were also reviewed in their study.
In the majority of the studies they reviewed they found that female taxpayers were
more compliant than their male counterparts, and older taxpayers tended to be more
5
6
7
8
9
RW. McGee, ‘The Ethics of Tax Evasion: A Survey of Romanian Business Students and Faculty’,
(2006) 4(2) ICFAI Journal of Public Finance 38-68.
RB Cross and GK Shaw, ‘The evasion-avoidance choice: a suggested approach.’,(1981) 34
National Tax Journal 489-491.
Y Song and TE Yarbrough, ‘Tax Ethics and Taxpayer Attitudes: A Survey’, (1978) 38(5) Public
Administration Review 442.
BR Jackson and VC Milliron, ‘Tax Compliance Research: Findings, Problems and Prospects’,
(1986) 5 Journal of Accounting Literature 125.
BR Jackson and VC Milliron, ‘Tax Compliance Research: Findings, Problems and Prospects’,
(1986) 5 Journal of Accounting Literature 125.
511
compliant than younger taxpayers. However, they noted that the compliance gap
between males and females appears to be shrinking with the emergence of a new
generation of liberated women. They found that the degree of certainty held regarding
the relationship with taxpayer compliance behaviour and demographic variables has
been virtually non-existent for a majority of the variables.
Oxley10 surveyed 16,000 randomly selected taxpayers in New Zealand, with 52
percent of respondents being women. The respondents were asked to assess on a
five-point Likert scale the seriousness of a $500 tax evasion and five other offences
involving the same amount of money, two of which were property-related crimes and
three of which were white collar crimes. The findings from this study indicated that
ten percent of women respondents felt that tax evasion was not serious. They found
that 53 percent of women respondents considered that tax evasion was an extremely
serious offence compared to cashing a cheque from a stolen cheque book (80 percent),
theft from employer (78 percent), shoplifting (77 percent), social welfare benefit fraud
(74 percent), and receiving a fraudulent insurance claim (67 percent). The results
revealed that males considered evading $500 of tax to be less serious than females.
A Hasseldine et al11 study of the characteristics of New Zealand tax evaders indicated
that evasion behaviour (under-reporting income and overstating deductions)
is associated with age, income, the number of evaders personally known, and the
morality and consequences of evasion behaviour. In addition, the results show that
the factors that give rise to or are associated with one category of evasion behaviour
are not necessarily predictive of another type of evasion behaviour, suggesting the
associations between factors are not causal.
Hite12 in a nation-wide survey tested the relationship between gender and tolerance
of tax evasion. The study suggests that female respondents with higher education were
found to have significantly more tolerant attitudes towards tax evasion behaviour than
less educated females. Conversely, this study found that male respondents became
significantly less tolerant of evasion as their education levels increased. The study
also found that higher income levels increased the acceptability of noncompliance for
female subjects but had no effect on the behaviour of males. The study reports that
moral pleas for compliance significantly improved the compliance of the respondents
with higher education, but had only a marginally significant effect on the compliance
behaviour of others. The study suggests that taxpayers may have different perceptions
of detection probability depending on whether noncompliance takes the form of
overstating deductions or underreporting income.
10 P Oxley, ‘Women and Paying Tax’, in C Scott (ed), Women and Taxation, (Wellington, Institute
of Policy Studies, 1993) 48.
11 DJ Hasseldine, SE Kaplan and LR Fuller, ‘Characteristics of New Zealand Tax Evaders: A Note’,
(1994) 34(2)Accounting and Finance 79.
12 P Hite ‘Identifying and Mitigating Taxpayer Non-compliance’, (1997) 13,Australian Tax Forum
155.
CB and KM13 surveyed New Zealand tertiary students to investigate the relationship
between demographic variables and eithical positions of students of different fields
of study. They found that the ethical standard of business students is not significantly
different from that of non- business students. The results showed that female students
are more ethical than male studentsand senior students are more ethical than junior
students.
Birch, Peters and Sawyer14 surveyed New Zealand tertiary students to investigate
the relationship between demographic variables and New Zealanders’ attitude
towards tax evasion. They found 14 percent of respondents felt that tax evasion
was totally acceptable and 25 percent said tax evasion was totally unacceptable. The
findings revealed that eight out of ten demographic variables analysed: course, age,
ethnicity, qualification, employment status, occupation, income, work experience
and tax return filing experience, held statistically significant relationships at the
five percent level with the acceptability and incidence of tax evasion behaviour. The
two demographic variables that failed to show a statistically significant relationship
were gender and employment status. Their results indicated that respondents with
a taxation qualification and those with a higher qualification are least likely to have
understated their taxable income. The results also showed that younger respondents
were significantly more likely than respondents with several years’ work experience to
consider over-claiming of deductions as acceptable.
Richardson15 carried out a survey of postgraduate business students to investigate
the impact of some key demographic variables relating to age, gender, education and
occupation status on perceptions of fairness of tax system in Hong Kong and the
results were analyzed using the ANOVA statistical technique. The results revealed that
respondents in the 30-34 age group perceived the Hong Kong tax system to be fairer
in comparison with the younger respondents. They also found that females perceived
the Hong Kong tax system to be fairer than males. Education and occupation status
were found not to be statistically significant. Richardson16 also carried out a survey
of postgraduate business students to investigate the impact of some key demographic
variables relating to age, gender, education and occupation status on tax compliance
behaviour in Australia and the results were analyzed using the OLS multiple regression
statistical technique. The results revealed that respondents relating to the 20-29 age
group and the 16-17 years education group are significantly correlated (p<0.01) with
tax compliance behaviour. None of the other variables were found to be significant.
The results show that demographic variables have a minor impact on tax compliance
13 Alan CB Tse and Alan KM Au, ‘Are New Zealand business students more unethical than nonbusiness students?’ (1997) 16(4) Journal of Business Ethics 445-450.
14 A Birch, T Peters, and AJ Sawyer, ‘New Zealanders’ Attitudes Towards Tax Evasion: A
Demographic Analysis’, (2003) 9(1) New Zealand Journal of Taxation Law and Policy 65.
15 G Richardson, ‘An Exploratory Study of Taxpayers’ Perceptions of Fairness of the Hong Kong
Tax System’, (2004) 10(2) New Zealand Journal of Taxation Law and Policy 131.
16 G Richardson, ‘A Preliminary Study of the Impact of Tax Fairness Perception Dimensions on Tax
Compliance Behaviour in Australia’,(2005) 20(3) Australian Tax Forum 407.
513
behaviour in Australia. However, the survey participants were all postgraduate
business students and hence the results may not be generalisable to the population
as a whole.
Wenzel,17 in an Australian field study, investigated the relationship between ethics,
norms and tax compliance. The findings revealed a complex role of individual
ethics and social norms in tax compliance. The study reports that strong tax ethics
exclude tax evasion from one’s behavior. Wallschutzky18 investigated the behaviours
of Australian tax evaders and the general population. The results indicate that there
was very little difference in the attitudes regarding tax evasion of the tax evaders and
the general population. Wallschutzky 19 also suggests that some form of motivation is
more important than opportunity for tax evasion.
Devos20 examined the attitudes of Australian tertiary students towards tax evasion.
Interestingly, the findings revealed that the majority of the respondents (65 percent)
were unsure whether tax evasion was a serious offence. Devos21 investigated the
relationship between eight demographic variables (gender, age, nationality, education/
qualifications, occupation and income level, employment status and tax return filing
status) and the attitudes of Australian and New Zealand tertiary students towards tax
evasion. The research indicates that for Australian respondents all eight demographic
variables had a statistically significant relationship at the five percent level with the
incidence of tax evasion. The findings from New Zealand respondents revealed that
six of the eight being age, nationality, education, occupation, income level and tax
return filing status held important implications for tax evasion. The demographic
variables employed were tested for statistical significance at 5 percent.
Devos22 also investigated the relationship between eight demographic variables
(gender, age, nationality, education/qualifications, occupation and income level,
employment status and tax return filing status) and the attitudes of Australian
individual taxpayers towards tax evasion. The results were similar to his earlier
17 M Wenzel, ‘Motivation or rationalization? Causal relations between ethics, norms and tax
compliance’ (2005) 26(2) Journal of Economic Psychology 491-508.
18 IG Wallschutzky, ‘Possible causes of Tax Evasion’ (1984) l 5(4) Journal of Economic Psychology
371-84.
19 IG Wallschutzky, ‘The Effects of Tax Reform on Tax Evasion’, (Australian Tax Research
Foundation, Sydney, 1988).
20 K Devos, ‘The Attitudes of Tertiary Students on Tax Evasion and the Penalties for Tax Evasion A Pilot Study and Demographic Analysis’, (2005) l 3(2) e-Journal of Tax Research 222.
21 K Devos, ‘The Attitudes of Australian and New Zealand Tertiary Students Towards Tax Evasion:
A Comparative Study and Demographic Analysis’, (2006) 12(4) New Zealand Journal of Taxation
Law and Policy 293.
22 K Devos, ‘Tax Evasion Behaviour and Demographic Factors: An Exploratory Study in Australia’,
(2008) 18(1) Revenue Law Journal 1-43.
Australian tertiary students study.23 However, in these studies tax evasion was not
compared to any act which is not illegal.
A few studies have compared tax evasion to other offenses to determine the relative
degree of seriousness. A study of the United States24 investigated perceptions of the
seriousness of tax evasion compared to 20 other offenses, including violent crimes such
as murder and rape and lesser offenses, such as jaywalking. The study also included
six white-collar crimes. That study found that tax evasion was only somewhat serious.
In terms of seriousness it was about equal to violating minimum wage laws. It was less
serious than other white collar crimes.
Gupta25 replicated the USA study in New Zealand. In that study tax evasion ranked 12th
among the 21 offences surveyed, compared to an 11th place ranking in the USA study.
Tax evasion was perceived as being less serious than other white collar crimes such as
accounting fraud, welfare fraud, violations of the minimum wage law and the child
labor law, more serious than insider trading and equally as serious as insurance fraud.
Another group of empirical studies of tax evasion were conducted using the World
Values survey data.26 One study compared opinions in the USA to those in Six Latin
American countries.27 Other studies compared tax evasion opinions in Asia,28 Egypt,
Iran and Jordan,29 fifteen transition countries and two developed countries,30 thirtythree countries,31 and Moldova and Romania.32
23 K Devos, “The Attitudes of Australian and New Zealand Tertiary Students Towards Tax Evasion:
A Comparative Study and Demographic Analysis”, (2006) 12(4) New Zealand Journal of Taxation
Law and Policy 293.
24 S Karlinsky, HA Burton and C Blanthorne, ‘Perceptions of Tax Evasion as a Crime’’ (2004) 2(2)
eJournal of Tax Research 226. See also HA Burton, S. Karlinsky and C Blanthorne, ‘Perception of
a White-Collar Crime: Tax Evasion,’ (2005) 3 ATA Journal of Legal Tax Research 35-48.
25 R Gupta, ‘Perceptions of Tax Evasion as a Crime: Evidence from New Zealand’, (2006) 12(3) New
Zealand Journal of Taxation Law and Policy 199-223.
26 www.worldvaluessurvey.org/ network/WVS 2005-2008.
27 RW. McGee and Wendy Gelman, ‘Opinions on the Ethics of Tax Evasion: A Comparative Study
of the USA and Six Latin American Countries’, (2009) 24 Akron Tax Journal 69-91. Tax evasion
is more favorably viewed in some countries than others. Women are sometimes more averse to
tax evasion but not in all countries.
28 RW. McGee, ‘Ethics and Tax Evasion in Asia’, (2007) 5(2) ICFAI Journal of Public Finance 21-33.
29 RW. McGee and Sanjoy Bose, ‘Attitudes toward Tax Evasion in the Middle East: A Comparative
Study of Egypt, Iran and Jordan’, (2006) 3 Accounting and Finance in Transition 23-34.
30 RW. McGee, ‘Cheating on Taxes: A Comparative Study of Tax Evasion Ethics of Fifteen Transition
Economies and Two Developed Economies’, (2006) 3 Accounting and Finance in Transition
273-289.
31 RW. McGee and Michael Tyler, ‘Tax Evasion and Ethics: A Demographic Study of Thirty-Three
Countries’, (2007) 1(1) International Journal of Business, Accounting and Finance 95-114.
32 RW. McGee, ‘Views toward Tax Evasion: A Comparative Study of Moldova and Romania’, (2009)
7(3&4) ICFAI University Journal of Public Finance 7-24.
515
The World Values Surveys33 were conducted by a large international network of social
scientists. To date they have conducted five waves of surveys. The Fourth Wave (19992004) consisted of interviews of more than 200,000 people in more than 80 countries.
The Fifth Wave (2005-2008) conducted interviews of people in 57 countries, including
Australia and New Zealand. A few of the questions asked about views on tax evasion
and other ethical issues. Portions of the Australia and New Zealand studies are
discussed and analyzed in this paper.
This study makes a contribution to the literature by reporting across demographic
variables that most previous studies utilized (e.g., gender, income level, age, education,
occupation and marital status) and also extend previous researches by comparing tax
evasion to both legal and Illegal activities in New Zealand.
Based on the above discussion, the following hypotheses are tested in this paper:
H1: Faculty are significantly more opposed to tax evasion than are graduate or
undergraduate students.
H2: Graduate students are significantly more opposed to tax evasion than are
undergraduate students.
H3: Views on the ethics of tax evasion do not differ based on academic major.
H4: Attitude toward tax evasion does not differ by gender.
H5: Attitude toward tax evasion does not differ based on religious affiliation.
H6: Attitude toward tax evasion does not differ by age.
H7: There is no significant interaction between different demographic characteristics.
H8: Tax evasion is less justifiable than other acts.
H9: Attitude toward tax evasion does not differ by gender in Australia and New
Zealand (Studies 2 & 3).
H10:The results based on gender will not differ between Study 1 and the data
gathered in the World Values surveys (Studies 2 & 3).
H11: Attitudes toward tax evasion does not differ by religion in Australia and New
Zealand (Studies 2 & 3).
3
Study 1 (New Zealand)
Study 1 is a partial replication of the most recent World Values Survey34 of New
Zealand. However, this study goes beyond mere replication because it makes various
33 World Values Surveys www.worldvaluessurvey.org/.
34 World Values Surveys www.worldvaluessurvey.org/.
comparisons that the World Values Surveys did not. In fact, the World Values Surveys
do not make any comparisons whatsoever. They merely provide databases for scholars
to use to make their own comparisons. The present study (Studies 2 & 3) also analyzes
the data gathered as part of the World Values studies in New Zealand and Australia
and compares those results to the data gathered for Study 1.
3.1 Methodology
Study 1 asks the same tax evasion question that the World Values Survey asked –
Is it ever justifiable to evade taxes if you have a chance? The survey questionnaire
is contained in an Appendix to this article. Due to time and budgetary constraints,
the potential respondents were randomly selected from Auckland University of
Technology, the University of Auckland and other tertiary institutions from the
greater Auckland metropolitan area, most of whom were young and all of whom had
attained a certain level of education. A few faculty members were also surveyed. Thus,
the sample population of Study 1 is not identical to that of the World Values Survey.
The sample in Study 1 is younger and more educated.
A cover letter explaining the purpose of the study was attached to the survey
questionnaire. To encourage candid responses to the survey, the cover letter explained
that the responses would remain anonymous. On the survey questionnaire, no names
were given by respondents. Since respondents were asked for their personal belief,
the survey emphasised there was no right or wrong answer. Apart from last question
where respondents were asked to give reasoning about their views about tax evasion
all other questions are closed-ended, thus reducing the questionnaire’s complexity
and completion time.
Like the World Values Survey, Study 1 used a 10-point Likert Scale to determine the
extent of agreement or disagreement with the statement. The statements were adopted
from the World Values Survey Wave 3 (1998) and Wave 5 (2004). The World Values
Survey interviewed a wide range of individuals in terms of age, level of education,
etc. Although around 2,100 potential respondents were approached, only 974
respondents accepted the survey and filled out the questionnaire. Therefore, the total
response rate is 46%. This is relatively high response rate compared to prior studies.35
Then, via the data screening process, 7 questionnaires were abandoned, because of
too many missing values. Finally, there were only 967 valid questionnaires for use in
data analysis.
One possible criticism of the methodology used in this study is that students may
not be representative surrogates for adult accounting, business, legal or medical
professionals. However, sampling student populations is a valid methodology, one
that has been used in various social science disciplines. Another reason to validate the
35 Oxley achieved a 29 percent response rate (see P Oxley, ‘Women and Paying Tax’, in C Scott
(ed), Women and Taxation, (Wellington, Institute of Policy Studies, 1993)); and Hasseldine et al
achieved a 22 percent response rate (see DJ Hasseldine, SE Kaplan, and LR Fuller, ‘Characteristics
of New Zealand Tax Evaders: A Note’, (1994) 34(2) Accounting and Finance 79).
517
present methodology is that students were used in Inglehart et al36 tax studies. Hite’s37
tax compliance study found that, although responses of students, tax preparers and
Chamber of Commerce respondents with more tax knowledge were different than
respondents solicited from a telephone directory, a city map, a national listing and a
prospective juror list, relationships were positively correlated for the entire sample.
What can be said about Study 1 is that the results represent student opinion. However,
the results may be more generalizable, because at least 200 participants were 30 years
old or older and many of the younger respondents were 25 or older and presumably
most, if not all, of them have been paying taxes for a number of years. Many of the
participants also have work experience. Thus, Study 1 consists of adults who also
happen to be students.
Table 1 shows the frequency of our demographic data and tax evasion rating relating
to respondents’ demographics. Standard deviations were not computed for categories
with small sample sizes.
Table 1: Summary of Demographic Data and Tax Evasion Statistics — Study 1
Category
Sample Size
Mean
(Tax Evasion)
SD
Graduate
337 (35%)
2.63
2.05
Undergraduate
593 (61%)
2.92
2.23
33 (4%)
1.45
1.09
4
1.00
-
Accounting
536 (56%)
2.70
2.22
Art & Design
16(2%)
2.00
1.67
296 (31%)
2.97
2.14
5
2.60
2.07
19 (2%)
2.68
2.38
Student Status
Faculty
Other
Academic Major
Business & Economics
Theology or Religious Studies
Philosophy
36 R Inglehart, M Basanez, J Diez-Medrano, L Halman and R Luijkx, eds., 2004, Human Beliefs and
Values: a cross-cultural sourcebook based on the 1999-2002 values surveys, Siglo XXI Editores,
Mexico City.
37 P Hite, ‘An Examination of the Impact of Subject Selection on Hypothetical and Self-Reported
Taxpayer Noncompliance’, (1988) 9(4) Journal of Economic Psychology 445-467. Hite’s tax
compliance study investigated whether self-reported past compliance data corresponds
to government-reported data and whether self reported past behaviour corresponds with
hypothetical reporting behaviour. The study found that hypothetical responses by respondents
solicited from a telephone directory, a city map, a national listing and a prospective juror list
tend to be influenced by habitual patterns of tax reporting behaviour and by fairness judgments.
Category
Sample Size
Mean
(Tax Evasion)
SD
47 (5%)
1.97
1.34
Engineering
1
2.00
-
Food Technology
5
4.40
3.78
Hospitality & Tourism
6
2.33
1.21
36 (4%)
3.22
1.74
Male
404 (42%)
3.02
2.27
Female
563 (58%)
2.57
2.05
20 (2%)
3.20
1.93
Law
Medical Sciences
Gender
Religion
Agnostic
Atheist
Buddhist
173(18%)
3.01
2.41
66 (7%)
2.92
2.04
Christian
398(41%)
2.79
2.13
Hindu
138(14%)
2.18
1.76
Jewish
27 (3%)
3.25
2.42
Muslim
66 (7%)
2.66
2.03
Other
44 (5%)
2.75
2.59
Sikh
11 (1%)
1.90
1.37
Taoist
24 (2%)
3.08
2.12
15-29
762(79%)
2.79
2.15
30-49
185(19%)
2.74
2.24
20(2%)
1.55
0.82
Age
50+
Notes:
• Sample size percentages are shown in parentheses. Percentages have been rounded to the nearest
decimal point.
• Tax evasion is assessed on a 10-point Likert Scale where “1” represents never justifiable and “10”
indicates always justifiable.
3.2Findings
The findings are discussed below. A word of caution is in order. The weighted average
means for the subgroups do not always correspond perfectly to the overall means. That
519
is because the mean for the total sample sometimes includes participants who are not
included in the subgroupings. For example, there were 967 total participants but only
963 participants provided their student status, so 4 sets of responses were excluded
from the student status comparison. Only four academic majors had a sufficiently
large sample size to perform any kind of meaningful analysis (law, accounting,
business & economics and medical sciences). The data for the 52 respondents who
had other academic majors were not included in the analysis of weighted average
mean scores by academic major. When comparisons are made between the results
for Study 1 and the other two studies, mean scores are rounded to one decimal place.
Since the dependent variable was measured using a 10 point Likert type of scale
and independent variables were ordinal in nature, a univariate analysis was used to
analyse the quantitative data obtained from the survey. We used the mean scores to
rank the various categories. We performed t-tests to determine two-tailed p values
and whether the differences in mean scores were significant. We chose this approach
to conform to the methodological approach used in some other studies that are
discussed in the literature review section.
3.2.1 Comparison of Categories of Demographic Characteristics
(H1to H6)
Table 2: A
cceptability of Tax Evasion by Comparison of Categories of
Demographic Variables
t value
p value
0.000***
Student Status
Faculty v. Graduate students
3.25
0.001***
Faculty v. Undergraduate students
3.74
0.000***
Graduate students v. Undergraduate students
1.91
0.055*
0.058*
Academic Major
Law v. Accounting
2.19
0.028**
Law v. Business & Economics
3.07
0.002***
Law v. Medical Sciences
3.67
0.000***
Accounting v. Business & Economics
1.70
0.070*
0.002***
Gender
Female v. Male
3.16
0.001***
0.040**
Religion
Hindu v. Muslim
1.74
0.081*
Hindu v. Christian
3.02
0.002***
t value
p value
Hindu v. Buddhist
2.67
0.008***
Hindu v. Atheist
3.40
0.000***
Hindu v. Taoist
2.24
0.026**
Hindu v. Jewish
2.71
0.007***
0.037**
Age
50+ v. 30-49
2.35
0.019**
50+ v. 15-29
2.58
0.009***
Notes:
• Comparison of those categories of demographics are shown which were found to be statistically
significant.
• *** p <0.01, ** p <0.05, * p <0.10 (2 tail).
As shown in Table 1 we were able to obtain the opinions of 33 faculty members as
well, so we decided to include faculty opinion and compare it to the opinions of the
two student groups. Faculty members are those respondents who are working at
various teaching institutes and are also studying for proficiency. It was thought that
the sample size for the faculty might be too small to obtain a reliable measurement
but such was not the case. Table 2 indicates that the differences were all significant.
Mean ranking and comparison of acceptability of tax evasion across student status
indicate faculty (mean = 1.45) are significantly more opposed to tax evasion than
are graduate (mean = 2.63) or undergraduate (mean = 2.92) students (p=0.001 for
graduate students; p=0.000 for undergraduate students) which supports the first
hypothesis. The results also support the second hypothesis that graduate students
are significantly more opposed to tax evasion than are undergraduate students at the
(p=0.055) level. The result is consistent with prior studies38 that found people with a
higher level of education tended to be more ethical than people with a lower level of
education.
Only four majors (law, accounting, business & economics, medical sciences) had a
sufficiently large sample size to conduct statistical analysis for the present study. Mean
ranking and comparison of acceptability of tax evasion across academic major shows
that the ethics of tax evasion do differ based on academic major. Law majors (mean =
38 Y Song and TE Yarbrough, ‘Tax Ethics and Taxpayer Attitudes: A Survey’, (1978) 38(5) Public
Administration Review 442.; Westat Inc, Individual Income Tax Compliance Factors Study,
(Rockville, Westat Inc, 1980; A Birch, T Peters, and AJ Sawyer, ‘New Zealanders’ Attitudes
Towards Tax Evasion: A Demographic Analysis’, (2003) 9(1) New Zealand Journal of Taxation
Law and Policy 65; K Devos, ‘The Attitudes of Australian and New Zealand Tertiary Students
Towards Tax Evasion: A Comparative Study and Demographic Analysis’, (2006) 12(4) New
Zealand Journal of Taxation Law and Policy 293.
521
1.97) were significantly more opposed to tax evasion than any other major (p=0.028
for accounting; p=0.002 for business & economics; p=0.000 for medical sciences).
Accounting majors (mean = 2.70) were more opposed to tax evasion than were
business and economics majors (mean = 2.97, p=0.070). Medical sciences majors
were least opposed to tax evasion (mean = 3.22).39 Thus, the third hypothesis is not
supported. The results do not support a prior study40 finding that business students
are not more ethical or unethical than non-business students.
This result makes sense if one begins with the premise that law majors have more
respect for the rule of law and for government authority. Accounting majors were
significantly more opposed to tax evasion than were business and economics majors
at the 10 percent level. Surprisingly, the difference in mean scores between accounting
majors and medical science majors was not significant in spite of the fact that their
mean scores were farther apart than were the mean scores for the accounting and
business & economics majors. This result might be explained by the fact that the
sample size for the medical services group was only 36. It is likely that the difference
would have been significant if the medical science major sample had been larger.
Mean ranking and comparison of acceptability of tax evasion across gender shows
that females (mean = 2.57) were significantly more opposed to tax evasion than males
(mean = 3.02, p=0.001). Thus, the fourth hypothesis is not supported. The result is
consistent with prior studies41 that females are more ethical than males, but only if
one begins with the premise that tax evasion is unethical.
Mean ranking and comparison of acceptability of tax evasion across the religion
demographic indicate that ethical views toward tax evasion do differ based on
religious affiliation. Hindus (mean = 2.18) were significantly more opposed to tax
evasion than were any of the other religions compared (p=0.002 for Christian; p=0.008
for Buddhist; p=0.000 for Atheist; p=0.007 for Jewish; p=0.026 for Taoist; p=0.081
for Muslim). No significant differences were found for other religion comparisons.42
39 Medical sciences v accounting p=0.1691; Medical sciences v business & economics p=0.5033.
41 BR Jackson and VC Milliron, ‘Tax Compliance Research: Findings, Problems and Prospects’,
(1986) 5 Journal of Accounting Literature 125; M Richardson and AJ Sawyer, ‘A Taxonomy of the
Tax Compliance Literature: Further Findings Problems and Prospects’, (2001) 16(2) Australian
Tax Forum 137; JD Eicher, JS Thomas and LS Wendy, ‘Men, Women, Taxes and Ethics’, Tax Notes
October 21,2002 at 401-406; P Oxley, ‘Women and Paying Tax’, in C Scott (ed), Women and
Taxation, (Wellington, Institute of Policy Studies, 1993) 48; R McIntosh and J Veal, ‘Tax Evasion
and New Zealanders’ Attitudes Towards It’, (2001) 7(2) New Zealand Journal of Taxation Law
and Policy 80; G Richardson, ‘An Exploratory Study of Taxpayers’ Perceptions of Fairness of the
Hong Kong Tax System’, (2004) 10(2) New Zealand Journal of Taxation Law and Policy 131; Alan
CB Tse and Alan KM Au, ‘Are New Zealand business students more unethical than non-business
students?’ (1997) 16(4) Journal of Business Ethics 445-450.
42 Muslim v Christian p=0.658; Muslim v Atheist p=0.296; Muslim v Buddhist p=0.468; Muslim
v Jewish p=0.231; Muslim v Taoist p=0.397; Christian v Atheist p=0.264; Christian v Buddhist
p=0.637; Christian v Jewish p=0.275; Christian v Taoist p=0.515; Atheist v Taoist p 0.898; Atheist
The sample sizes for the Jewish (27) and Taoist (24) groups were small, which might
explain why some differences were not significant even though the mean scores were
relatively far apart. Some religions were omitted because of the small sample size.
Thus, the fifth hypothesis is not supported. The result is consistent with a prior study
that religious affiliation affects ethical attitudes toward tax evasion. Our religion status
result does not support the Tse and Au43 earlier research findings that religiosity was
not a significant factor.
Mean ranking and comparison of acceptability of tax evasion across age shows that
the ethics of tax evasion do differ based on age. People over 50+ (mean = 1.55) were
significantly more opposed to tax evasion than were either of the younger groups
(p=0.019 for 30-49 age group and p=0.009 for 15-29 age group). Thus, the sixth
hypothesis is not supported. These results are particularly significant, given the fact
that the sample size for the oldest group was only 20. If the sample size had been
larger it is expected that the differences would have been even more significant. The
difference in views between the youngest (mean = 2.79) and middle group (mean =
2.74) was not significant (p=0.741). The result is consistent with the literature44 that
older taxpayers are normally more compliant than younger taxpayers.
3.2.2 Interaction of Demographic Characteristics (H7)
This study also attempted to look at how acceptability of tax evasion is affected by
interaction of respondents’ demographic characteristics. Univariate analysis of
Variance45 (Table 3) is used to examine the interaction effects of the five independent
demographic variables on the ratings of tax evasion (dependent variable). To conduct
the “Univariate ANOVA” of Variance we took one demographic as covariate and other
demographics as random variables for a meaningful analysis.
v Buddhist p=0.781; Atheist v Jewish p=0.629, Buddhist v Jewish p=0.498; Buddhist v Taoist
p=0.747; Jewish v Taoist p=0.785.
44 M Richardson and AJ Sawyer, ‘A Taxonomy of the Tax Compliance Literature: Further Findings
Problems and Prospects’, (2001) 16(2) Australian Tax Forum 137; A Birch, T Peters, and AJ
Sawyer, ‘New Zealanders’ Attitudes Towards Tax Evasion: A Demographic Analysis’, (2003) 9(1)
New Zealand Journal of Taxation Law and Policy 65; K Devos, ‘The Attitudes of Australian and
New Zealand Tertiary Students Towards Tax Evasion: A Comparative Study and Demographic
Analysis’, (2006) 12(4) New Zealand Journal of Taxation Law and Policy 293; DJ Hasseldine,
SE Kaplan and LR Fuller, ‘Characteristics of New Zealand Tax Evaders: A Note’, (1994) 34(2)
Accounting and Finance 79.
45 It is the most suitable technique when there is a single, continuous dependent measure (tax
evasion) and dichotomous independent measures such as gender.
523
Table 3: Interaction Effects of Respondents’ Demographics on Acceptability of
Tax Evasion46
Mean Square
F
p
45.991
9.94
.002
Covariate46
Student Status
Interactions
Religion * Academic Major
2.882
.62
.941
Religion * Age
1.893
.40
.967
Religion * Gender
2.075
.44
.908
Academic Major * Age
5.698
1.23
.282
Academic Major * Gender
1.582
.34
.850
Age * Gender
2.856
.61
.540
Religion *Academic Major * Age
2.374
.51
.881
Religion *Academic Major * Gender
5.035
1.08
.361
Religion *Age * Gender
2.725
.58
.852
Study Area * Age * Gender
2.606
.56
.689
Religion *Academic Major * Age *Gender
11.359
2.45
.062
The results reported in Table 3 indicate that the interaction effect is almost
insignificant among demographic characteristics, which supports the seventh
hypothesis. However, there is a weak significant interaction effect among religion,
academic major, age and gender (p =.062). There is no significant interaction effect
among demographic variables when religion, or academic major or age or gender
was taken as a covariate. This is noticeably different from the Hite47 study, which
showed significant interaction of gender, education, income and moral ploy on the
respondents’ attitudes and behaviour in relation to taxpayer compliance.
3.2.3 Relative Seriousness of Tax Evasion (H8)
We wanted to determine where tax evasion ranked compared to other acts that might
be considered unjustifiable, so we listed five more acts in the survey instrument. From
a total of six acts, five acts listed were the same five acts that were included in the World
Values Survey Wave 5 (2004)48 and buying stolen goods was in the World Values
Survey Wave 3 (1998)49. From the six acts listed from the World Values Surveys, the
first five acts in the survey instrument are illegal in New Zealand but the last one,
prostitution, is legal in New Zealand. The reason for including prostitution is that
46
47
48
49
Results of those covariates are shown which were found to be statistically significant.
P Hite ‘Identifying and Mitigating Taxpayer Non-compliance’, (1997) 13,Australian Tax Forum 155.
[V198,199,200, 201, 203].
[F139] No excel spreadsheet is available for this statement.
in New Zealand, a large portion of the population is immigrants and is of different
cultures and in most of the countries in the world prostitution is illegal. The study
found that there is some support for tax evasion but that support is generally weak.
The overall means score was 2.76 on a scale from 1 to 10, where 1 = never justifiable.
Table 2 ranks the results by acts and compares acceptability of tax evasion across
different acts for the present study.
The data shows that tax evasion is not considered as serious an offense as most of the
other illegal acts. The least justifiable act was accepting a bribe. The most justifiable
act was prostitution, which is legal in New Zealand. Cheating on taxes ranked fifth
in terms of seriousness. A comparison of means and standard deviations found that
almost all comparisons were significant at the 1 percent level. The results are reported
below in Table 4.
Table 4: Mean Ranking (italics) and Comparison of the Acceptability of Tax
Evasion across Different Acts
Act
Accepting
bribe
Buy stolen
goods
Claiming
government
benefit
Avoiding
a fare on
public
transport
Tax cheating
Prostitution
Accepting
bribe
Buy
stolen
goods
Claiming
government
benefit
Avoiding
a fare on
public
transport
Tax
cheating
Prostitution
1.88
0.000***
0.000***
0.000***
0.000***
0.000***
(1.42)
(t=5.28)
(t=6.20)
(t=10.00)
(t=10.58)
(t=15.30)
2.27
0.211
0.000***
0.000***
0.0001***
(1.79)
(t= 1.25)
(t=5.00)
(t=5.42)
(t=10.55)
2.38
0.00***
0.000***
0.000***
(2.06)
(t=3.58)
(t=3.96)
(t=9.03)
2.72
0.76
0.000***
(2.22)
(t=0.30)
(t=5.60)
2.76
0.000***
(2.15)
(t=5.39)
3.34
(2.62)
Notes:
•
•
•
•
•
Cell values indicate the significance of the differences between the acts.
*** p <0.01, ** p <0.05, * p <0.10 (2 tail).
The diagonal values are mean in italics and Standard Deviations (in parentheses) for the variables.
The variables are arranged by rank.
t-statistics are in parentheses below the p values for the comparison of the acts.
525
The results reported in Table 4 indicate that tax evasion is more justifiable than
most other acts. Tax evasion was found to be more justifiable than accepting a bribe
(p=0.000), buying stolen goods (p=0.000) and claiming government benefits to
which you are not entitled (p=0.000). Cheating on taxes and avoiding a fare on public
transport were found to be equally reprehensible (p=0.763). Cheating on taxes was
found to be less justifiable than prostitution (p=0.000), which shows some people
may believe that prostitution is not justifiable even though legal in New Zealand
but they still rank tax evasion higher in seriousness. Thus, the eighth hypothesis is
not supported. These findings are consistent with Karlinsky50 and Gupta,51 who also
found that tax evasion was less serious than most of the white collar crimes.
3.2.4 Respondent’s Views Reasoning
The survey instrument also provided space for respondents to explain the reasoning
behind their views. Only a small minority of respondents used this opportunity
to elaborate on their reasoning, so it was not possible to analyze their reasoning
statistically. A number of respondents used almost similar reasoning. A representative
sample of their views is summarized below.52
•
We should pay our fair share and be honest. [34]
•
Reduce benefits to lazy people who rely on the dole and have more kids
to get more money. [18]
•
Religion determines ethics. [42]
•
The listed items are against Christian values. [26]
•
Ethics are determined from what we are taught. [28]
•
It depends on your financial situation. [14]
•
Environment determines attitudes in life. [9]
•
The New Zealand system is unfair and unbalanced. [17]
•
Ethics is not defined by law. It’s the grey area that is a matter of judgment.
Some things can be unethical but allowed by law like prostitution. [37]
•
Cultural background has an impact on people’s ethics. [12]
•
If you don’t have money to pay the fare or the tax it is justifiable to
avoid. [15]
•
To improve the country, cheating on taxes is not fair. [26]
50 S Karlinsky, HA Burton and C Blanthorne, ‘Perceptions of Tax Evasion as a Crime’ (2004) 2(2)
eJournal of Tax Research 226. See also HA Burton, S. Karlinsky and C Blanthorne, ‘Perception of
a White-Collar Crime: Tax Evasion,’ (2005) 3 ATA Journal of Legal Tax Research 35-48.
51 R Gupta, ‘Perceptions of Tax Evasion as a Crime: Evidence from New Zealand’ (2006) 12(3) New
Zealand Journal of Taxation Law and Policy 199-223.
52 The number of respondents who made almost similar statement is given in brackets.
•
It is hard to pay taxes if the tax rate is very high. It demotivates to earn
more. [33]
•
Parents’ beliefs and morals have an effect on kids. [46]
•
Thinking from a utilitarian point of view, maximize happiness and
minimize pain. [12]
•
Ethical or unethical depends on the community you belong to. [24]
•
Society functions well if rules are obeyed. Social contract virtue ethics. [6]
•
If an act affects or harms other people it is unethical. [14]
•
Tax is high and we don’t want our money to go into politicians’ pockets. [21]
We propose that more investigation needs to be carried out to identify the factors
directly influencing the attitudes and beliefs surrounding the severity of crimes.
4
Study 2 (Australia) and Study 3 (New Zealand)
The World Values surveys were conducted by an international network of social
scientists. The Australia (Study 2) and New Zealand (Study 3) studies reported on
below included part of the data from those larger surveys. The World Values studies
did not evaluate the data collected; they merely collected the data and made it available
to social scientists. We used that data for studies 2 and 3.
4.1
Gender (H9)
The World Values Surveys gathered data on gender. The results are reported below in
Table 5.
Table 5 Mean Ranking (italics) and Comparison of Acceptability of Tax Evasion
across Gender in Study 2 (Australia) and Study 3 (New Zealand).
Gender
Male
(Study 2)
Female
(Study 2)
Male
(Study 3)
Female
(Study 3)
Mean Base 628
Male (Study 2)
Female (Study 2)
Mean Base 757
2.3 (2.1)
0.000***
Male (Study 3)
Female (Study 3)
Mean Base 402
Mean Base 483
2.4 (2.2)
0.000***
1.9 (1.74)
1.9 (1.79)
527
Notes:
• Variables Mean values in italics are followed by the corresponding Standard Deviations (in parentheses).
• In the World Value Survey the mean base was calculated by excluding ‘Don’t know’ and ‘No answer’
from the total sample size.
• *** p <0.01, ** p <0.05, * p <0.10 (2 tail).
The results reported in Table 5 indicate the ethics of tax evasion do differ based on
gender. Women were significantly more opposed to tax evasion in both Study 2
(p=0.000) and Study 3 (p=0.000). Thus, the ninth hypothesis is not supported.
Although Study 1 (Current Study) and the World Values Surveys (Studies 2 and 3)
asked the same question, the sample populations and methodology were different.
Thus, the results might be different.53
Table 6 compares the results of Study 1 to the data collected in the Australian and New
Zealand World Values surveys (Studies 2 and 3).
Table 6 (H10): C
omparison of Current Study and World Values Surveys –
Gender
Gender and Study
Male – Study 2 v. Study 3
Female – Study 2 v. Study 3
p values
0.464
1.000
0.000***
0.000***
0.000***
0.000***
Notes:
• *** p <0.01, ** p <0.05, * p <0.10 (2 tail).
The results reported in Table 6 indicates that in Study 2 and Study 3 Australian and
New Zealand males were equally opposed to tax evasion (p=0.464) and Australian
and New Zealand women were also equally opposed to tax evasion (p=1.000). In
Study 1 males and females were significantly less opposed to tax evasion than were
either of the two Studies (p=0.000 for Study 2; p=0.000 for Study 3). A comparison
of the mean scores of males (3.02) and females (2.56) in Study 1 to the data gathered
in Studies 2 (males 2.3, females 1.9) and 3 (males 2.4, females 1.9) also found that the
mean scores in Study 1 were significantly higher than those from the data gathered in
53 The data for Study 2 (Australia) was collected in 2005 by a team of social scientists. The data for
Study 3 (New Zealand) was collected by a team of social scientists in 2004. Data for Study 1 was
collected by the authors in 2009.
Studies 2 and 3, meaning that people were significantly less opposed to tax evasion in
Study 1. Thus, the tenth hypothesis is not supported.
4.2
Religion (H11)
Table 7 shows the data gathered in the World Values Surveys. Several sects of
Christianity are listed separately, since those were the categories used in the World
Value surveys. Comparisons were made between religions to determine whether the
differences in mean scores were significant. Some differences were significant for
Australia; none of the differences were significant for New Zealand. The calculation
of p values was not done for religions with small sample sizes.
Table 7: Tax Evasion Mean Ranking (italics) of Religion Data – World Values
Surveys
Study 2 (Australia)
Religion
Mean Base
Mean (SD)
Mean Base
Mean (SD)
177
2.0 (1.94)
Anglican
-
-
Buddhist
14
3.8 (3.48)
Christian
22
2 (2.18)
Hindu
9
1.2 (0.99)
Jehovah Witness
8
1
Jewish
10
2.1 (1.84)
Methodist
-
-
Orthodox
24
1.8 (1.44)
-
-
Protestant
404
1.7 (1.57)
Roman
322
2.1 (2.03)
Presbyterian
49
1.9 (1.59)
37
2.1 (2.37)
133
2 (1.92)
126
2.3 (1.98)
Notes:
• In the World Value Survey the mean base was calculated by excluding ‘Don’t know’ and ‘No answer’
Mean ranking and comparison of the acceptability of tax evasion across different
religions in Table 7 indicates that the difference in mean scores was significant for
the Australian sample for three Buddhist cases (Buddhist v. Orthodox p=0.017
(significant at the 5 percent level), Buddhist v. Protestant p=0.000 (significant at the
1 percent level), Buddhist v. Roman Catholic p=0.003 (significant at the 1 percent
level)) and for the comparison between Protestants and Roman Catholics (p=0.002,
significant at the 1 percent level). Statistically no significant differences were found for
529
other religion comparisons. Thus, the eleventh hypothesis is not supported. The result
is consistent with Study 1 that religious affiliation affects attitudes toward tax evasion.
Religions mean scores ranking for the three studies shows that the four religions most
opposed to tax evasion were all from Australia in Study 2 (Jehovah Witnesses (1.0),
Hindu (1.2), Protestant (1.7), Orthodox (1.8)). Most of the religions least opposed to
tax evasion were from New Zealand in Study 1 (Taoist (mean = 3.1), Jewish (mean =
3.3), Buddhist (mean = 3.8)).
4.3Age
Table 8 compares the age data for the two World Values Surveys (Studies 2 and 3).
Table 8: Tax Evasion Mean Ranking (italics) of Age Data – World Values Surveys
Study 2 (Australia)
Age group
Mean Base
Mean (SD)
Mean Base
Mean (SD)
15-24
102
2.5 (1.95)
59
2.9 (2.14)
25-34
148
2.4 (1.98)
118
2.3 (2.11)
35-44
228
2.4 (2.15)
200
2.4 (2.02)
45-54
320
2.2 (2.13)
173
2.4 (2.3)
55-64
289
1.9 (1.88)
165
2.0 (1.85)
65+
295
1.5 (1.23)
166
1.5 (1.31)
Notes:
• In the World Value Surveys the mean base was calculated by excluding ‘Don’t know’ and ‘No answer’
Table 8 indicates that there is a tendency for people to become more opposed
to tax evasion as they get older. In some cases the differences in mean scores are
significant. Differences were considered to be significant if the p value was at the
10 percent level. Mean ranking and comparison of the acceptability of tax evasion
across different age groups indicate that the difference in mean scores was significant
for both the Australian and New Zealand sample for eight age groups 15-24 v. 5564 (p=0.006(Australia) p=0.002 (New Zealand)), 15-24 v. 65+ (p=0.000 (Australia)
p=0.000 (New Zealand)), 25-34 v.65+ (p=0.000 (Australia) p=0.000 (New Zealand)),
35-44 v. 55-64 (p=0.005 (Australia) p=0.051 (New Zealand)), 35-44 v. 65+ (p=0.000
(Australia) p=0.000 (New Zealand)), 45-54 v. 55-64 (p=0.067 (Australia) p=0.079
(New Zealand)), 45-54 v. 65+ (p=0.000 (Australia) p=0.000 (New Zealand)), 55-64
v. 65+ (p=0.002 (Australia) p=0.004 (New Zealand)) ). The difference in mean scores
was significant in the Australian sample for 25-34 v. 55-64 (p=0.010) and in the New
Zealand sample for 15-24 v. 25-34 (p=0.077). Statistically no significant differences
were found for other age groups.
The age ranges used in Study 1 were different from the age ranges used in the two
World Values Surveys (Studies 2 and 3). Thus, comparisons between the data in Study
1 and the other two studies are imperfect. However, comparing similar age groups
does have some value.
Age mean scores ranking for the three studies shows that the oldest group in Study 1
(50+) (1.4) and Study 2 and 3 65+ (1.5) was most opposed to tax evasion. The other
two groups in Study 1 (15-29 (2.8) & 30-49 (2.7)) and Study 2 and 3 (15-24 (2.5, 2.9)
& 35-44(2.4)) were among the least opposed to tax evasion. Part of the explanation
for the relatively high ranking of the two younger groups in Study 1 might be because
of the different methodology employed – anonymous surveys instead of face to face
interviews.
4.4
Ranking of Various Acts
Table 9: Mean Ranking (italics) of Various Acts – World Values Surveys 200454
Accepting
bribe
Claiming
government
benefit
Tax
cheating
Avoiding
a fare on
public
transport
Prostitution
Australia55
1.5 (1.44)
1.8 (1.73)
2 (1.92)
2.3 (2.02)
4.6 (2.86)
New Zealand56
1.4 (1.37)
1.9 (1.86)
2.2 (1.99)
2.1 (1.85)
4.5 (2.86)
World
Values
Surveys
(Study 2 & 3)
Notes: 55 56
Table 9 indicates that tax evasion is not considered as serious an offense as most of the
other illegal acts. A comparison of the mean scores of various acts in Study 1 to the
data gathered in Studies 2 and 3 shows that in all three studies the least justifiable act
was accepting a bribe and the most justifiable act was prostitution, which is legal in
New Zealand. In Study 1 cheating on taxes was ranked (mean = 2.76) slightly less in
terms of seriousness than in Study 2 (mean = 2) and Study 3 (mean = 2.2). The results
of Study 3 supports the results found in Study 1 that in New Zealand tax evasion is
considered as the least serious offense compared to other illegal acts.
54 Buying stolen goods was on World Values Surveys Wave 3 (1998) [F139] and no Excel spread
sheet is available for this statement. World Values Surveys Wave 5 (2004) statements are: [V198,
199, 200, 201, 203].
55 Base for mean: Accepting bribe 1391, Claiming government benefit 1398, Tax cheating 1392,
Avoiding a fare on public transport 1396, Prostitution 1380.
56 Base for mean: Accepting bribe 902, Claiming government benefit 894, Tax cheating 899,
Avoiding fare on public transport 898, Prostitution 852.
5
531
Comparison of Studies and Summary of Findings
The results of the present study showed that women tend to be more averse to tax
evasion than men, faculty are more averse to tax evasion than students, graduate
students are more averse to tax evasion than undergraduate students, law students
are more averse to tax evasion than are other academic majors, accounting majors
are more averse to tax evasion than are other business students and medical science
students were the least averse to tax evasion among the groups surveyed. It was
also found that people tend to become more averse to tax evasion as they get older,
views toward tax evasion can differ based on religious affiliation. In summary, views
toward tax evasion are similar in Australia and New Zealand and tax evasion is not
viewed as a very serious offense compared to some other offenses. It is slightly more
serious than prostitution and less serious than accepting a bribe, buying stolen goods,
receiving government benefits to which you are not entitled and avoiding a fare on
public transport.
Another finding, one that is not limited to studies of tax evasion, is that student
opinions may or may not be generalizable to the total population, depending on
variable. Women tended to be more averse to tax evasion regardless of student status.
Older students tended to be more averse to tax evasion than younger students, just
like older people tend to be more averse to tax evasion than younger people. So
perhaps the determining variable is not student status but rather age or some other
variable, such as religion.
6
Concluding Comments
The principal limitation is attributable to the sampling process used. The research
sample only includes those who live in the Auckland region. It is supposed that people
living in other regions of New Zealand may have different views. Therefore, in future
studies, the target population should include all New Zealand consumers. The research
sample only includes those who live in the Auckland region. It is supposed that people
living in other regions of New Zealand may have different views. Therefore, in future
studies, the target population should include all New Zealanders so that results can be
compared to gather more accurate responses but on comparison with World Values
surveys it is felt the results reported here provide significant insight into human values
and beliefs of tax evasion in New Zealand and Australia.
The second limitation is the sampling technique. The majority sample consists of
students, which may have resulted in some demographic areas being underrepresented.
In the current survey, to control for this problem, a statistically significant sample was
used that reflected what the subject had in mind for each act to all the other acts.
However, the results may not generalise to wider populations of interest.
The third limitation is related to the possibility of misunderstanding of questions
and terminology used57 in the survey instrument. To control for this problem, the
questions used in the current study were adapted from the World Values Surveys.
One further obvious limitation of this study is that the study focused on only five
demographic variables, but there could be other relevant demographic and non
demographic variables, thereby limiting the overall results.
Notwithstanding these limitations, this study is intended to help clarify the relation
between demographic variables and human values and beliefs of tax evasion as well
as to offer additional insight into the demographics of tax evasion human values
and beliefs in New Zealand and Australia. This study confirms some of the findings
in other studies and disputes the findings in other studies. Although other studies
generally found that people become more averse to tax evasion as they get older, the
relationship between aversion to tax evasion and gender is less clear. Some studies
found that women are more averse to tax evasion, whereas other studies found men
to be more averse to tax evasion. A third group of studies found both genders to be
equally averse to tax evasion.
This study has made a valuable contribution to tax compliance literature in Australia
and New Zealand. The findings suggest that to control tax evasion, investigators at
the Inland Revenue Department (IRD) should monitor and select at random specific
groups of taxpayers eg young male taxpayers to conduct an audit that do not perceive
tax evasion as an offence. This would also suggest that revenue authorities need to
create awareness of voluntary tax compliance issues for the targeted groups through
community awareness programmes (such as publicity campaigns), similar to drunk
driving laws.
It is likely that views toward tax evasion also differ by country, although the present
study did not find that to be the case. That is probably because Australia and New
Zealand have similar demographics and both countries have a common law system
and a strong rule of law. Perhaps civil law countries and countries that do not have
a strong rule of law would have different views toward tax evasion. Less developed
countries might have different views toward tax evasion than developed countries.
Perhaps views in Africa are different than views in Western Europe. Perhaps views in
Eastern Europe are different than views in Western Europe. Perhaps views in Hindu or
Muslim countries are different than views in Christian countries, so these possibilities
should be explored in future research.
57 DA Dillman, Mail and Internet Surveys: The Tailored Design Method, 2 nd ed, New York, John
Wiley and Sons, 2000.
533
Appendix
Human beliefs and values survey (used in Study 1)
Instructions
As a participant you are individually anonymous. Do not put your name on the
questionnaire. Please write the appropriate number in the spaces provided to
indicate your opinion.
1 = never justifiable
2-9 = sometimes justifiable
10 = always justifiable
Completing the study should only take a few minutes. We thank you for thoughtful
consideration of your answers to these questions. We appreciate your participation
in our study.
1. ____ Claiming government benefits to which you are not entitled.
2. ____ Avoiding a fare on public transport.
3. ____ Cheating on taxes if you have a chance.
4. ____ Someone accepting a bribe in the course of their duties.
5. ____ Prostitution.
6. ____ Buy stolen goods.
Demographics
I am a(n):
❐ graduate student
❐ undergraduate student
❐ faculty member
❐other(specify)
My main area of study is:
❐accounting
❐ other business/economics
❐ theology/religious studies
❐philosophy
❐law
❐engineering
❐ other (specify)
Human beliefs and values survey (used in Study 1) (Cont.)
I am:
❐male
❐female
My religious affiliation is:
❐Hindu
❐Muslim
❐Christian
❐ Other (specify)
My age is:
❐15-29
❐30-49
❐50+
Optional Comments
What are your views on some of these issues? What determines whether it is
ethical or unethical?

Study on tax evasion perceptions in Australasia

Transcription

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