1 CHAPTER 1: INTRODUCTION 1.0 Chapter ... - DSpace@UM

(vertical equity) or in other words favour a lower tax rate. Hite & Roberts (1992) statedhow the Tax Reform Act 1986 of the US showed that self interest separately appeared asa variable in explaining evaluations made by taxpayers’ whether a tax system is fair ornot. Self interest is not fairness but it affects taxpayer attitudes. Wartick (1994) foundpeople who were made worse off by a tax law change perceive the system to be less faircompared to those who were not affected. It means the tax liability of one increasesbecause of a new tax law or because in comparison with another individual either in thehigher income class or a middle income class then his attitudes towards fairness isimpacted. Only fairness is considered when a tax system is being evaluated. So whatexplanations can be given about self interest and tax compliance? Self interest is selfcentered, individualistic and what is given to one cannot be accepted as fair when givento another person. Christensen et al. (1994) found significance between self interest andtax cheating i.e. noncompliance. If an individual believes that the tax system is not fairthen he thinks noncompliance or evasion itself is justified. The taxpayer uses thereasoning that what he found not fair he just do not comply. However, if he has beenexposed to the tax system he will then believe the tax system is actually fair.In the study by Hite & Roberts (1992) using 10 specific tax reform changes to understandassociation between self interest and fairness the findings showed there is associationbetween fairness and self interest in the case of tax reforms and tax changes. Uponexamining the relationship between tax compliance and self interest when a new tax lawor new tax rule is introduced taxpayer knew that his liability is going to increase. So hiscompliance behavior will decrease to balance up with the impact the new rule brought in.39