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compliance research and numerous tax compliance researches on tax fairness showedsignificant results. Generally the decision to comply or not is an individual’s rationalprofit seeking attitude (e.g. Allingham & Sandmo, 1972). A major difficulty in analyzingnoncompliance is in its methods of measurement.Braithwaite (2003) argues both taxpayers’ attitudes towards the tax system and their taxpaying behaviour together will have influence on the level of noncompliance. Thereforeboth have to be measured to understand overall levels of non compliant behaviour.Naturally individuals have incentives to conceal their cheating. This study which aims tosee the association between tax fairness and tax compliance uses the 14 noncomplianceitems developed by Yankelovich et al. (1984) which were used by Galligan & Richardson(2005) and Richardson (2006). Next discussion will look at deterrence and psychologytheory that relate to tax compliance.2.1.1 Deterrence TheoryThe taxonomy of tax compliance has been studied under theoretical perspectives ofdeterrence theory and fiscal psychology. Deterrence theory relates to sanctions, threats(fines and penalty structure). It has association with criminal justice. Tax noncomplianceis a soft type of “illegal” act of not complying with the tax laws. In fact evasion of taxwhich is an illegal act of evading tax and avoidance of tax refers to a legal concept of taxevasion and activities related to avoidance are tax planning and tax investment. Whatmade the deterrence theory that crucial? They were needed to deter the noncompliance18
activities of taxpayer who default to pay the government its rightful source of revenue.Taxpayers are profit seeking by gambling the benefits of evasion against the risk ofdetection and punishment.Researchers found a negative correlation using sanctions. However despite thisrelationship between fear of sanction and crime rate it can lead to a passive behaviour byindividual as reported by Cuccia (1994), Jackson & Milliron (1986), and Roth et al.(1989. Grasmick & Scott (1982) studied on the detection probability and the intentions toevade taxes and his findings were consistent with the deterrence theory.But literature that emerge later in late 80’s, psychology based variables were tested tounderstand tax compliance behavior e.g. role of moral obligation, perceptions of fairness,self interest and others. As stated by Torgler (2001), an increase in deterrence on honesttaxpayers will disrupt a balance. Taxpayers’ who paid fair dues but gets audited and laterfined, and even more disturbed when others who violated the law do not get punished.Therefore taxpayers’ cannot be treated harshly, because according to Murphy (2005) it isnot to punish but to repair the harm done and secure future compliance. Many taxresearchers have questioned the appropriateness of the deterrence theory framework(model) that is used to explain compliance behaviour because deterrence can also becounter productive. Thus, the study suggested attitudes towards the tax system inexplaining taxpayer noncompliance. Allingham & Sandmo (1972) investigated whetherhigh tax rate can or will enhance or decrease compliance. What can be deduced is thattaxpayer will only pay taxes because of fear of detection and punishment. Becker (1968)19
Page 4: noncompliance which means not repor
Page 10 and 11: individuals that push for tax fairn
Page 12 and 13: Following from hypothesis H1 - H5,
Page 14 and 15: 1.6 Limitations of the StudyThe fin
Page 16 and 17: CHAPTER 2: LITERATURE REVIEW2.0 Cha
Page 20 and 21: stated crime is an industry where m
Page 22 and 23: 2.2 Definition of Tax FairnessThe l
Page 24 and 25: Distribution in tax fairness refers
Page 26 and 27: elief, and evaluation between pragm
Page 28 and 29: elief that unfairness in the tax sy
Page 30 and 31: elevance of knowing the attitudes o
Page 32 and 33: It has been admitted by many resear
Page 34 and 35: significant results. The reasons gi
Page 36: unfair and also their exchange with
Page 39 and 40: (vertical equity) or in other words
Page 41 and 42: Jackson & Milliron (1986) found tha
Page 43 and 44: differences. Therefore the findings
Page 45 and 46: study education which is a noncompl
Page 47 and 48: CHAPTER 3: METHODOLOGY3.0 Chapter O
Page 49 and 50: Table 3.1: Reversed Coded Items on
Page 51 and 52: 3.2 Sampling DesignA non probabilit
Page 53 and 54: correlations and multiple regressio
Page 55 and 56: the four Federal Territory IRB bran
Page 57 and 58: analysis was carried out. Firstly,
Page 59 and 60: Table 4.3: Mean and Standard Deviat
Page 61 and 62: factor analysis was considered appr
Page 63 and 64: paid is fair to himself). Based on
Page 65 and 66: dependent variables but having the
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4.5.2 Correlation Matrix 2 between
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4.6.1 H1: There is a positive assoc
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The second predictor which was sign
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analyzed in Model 3a and 3b to know
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Model 3a band 3b was specifically t
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CHAPTER 5: CONCLUSIONS AND RECOMMEN
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taxes they pay, and may not be payi
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in the pay statements and they have
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service announcements such as, tele
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BIBLIOGRAPHYAllingham, M., & Sandmo
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Fallan, L. (1999), “Gender, expos
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Mazur, M. .J. & Plumley. A. (2007),
Page 92 and 93:
Singh, V. (2003), “Tax Compliance
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