important for culturally diverse countries such as New Zealand Australia the

Important for culturally diverse countries such as

This preview shows page 30 - 33 out of 241 pages.

important for culturally diverse countries such as New Zealand, Australia, the United Kingdom, the United States, Canada and Western Europe. Furthermore, the non-white groups are increasing in population in most OECD countries (Statistics New Zealand, 2010c; United States Census Bureau, 2010) and therefore warrant some attention
Image of page 30
17 regarding their compliance behaviours and perceptions, and how they might differ from the dominant ethnic cultural values. 2.3.3 Ethnicity, public spending, and tax morale Ethnicity not only affects tax evasion decisions but also the taxpayers’ willingness to contribute to taxes. Due to “intergroup bias” (Li, 2010, p. 149), ethnic groups are more willing to pay taxes to finance public spending that benefitted their own group but are reluctant to bear the economic cost for other groups (Alesina, Baqir, & Easterly, 1999; Alesina & Ferrara, 2005). For example, Luttmer (2001) finds that individuals increase their support for welfare spending when the recipients are from their own ethnic group. In addition, the greater the ethnic fractionalisation, the greater is the probability of noncompliance (Li, 2010). Given that, it is important to gain some understanding of the public spending preferences of the ethnic groups and how this may be related to their underlying cultural values. In general, experimental results show that tax compliance is higher when individuals can vote on the use of taxes than when there is no voting alternative (Alm, Jackson, & McKee, 1993). Various studies claim that taxpayers are more willing to contribute to taxes when their preferences are heard and taken into account in government spending (Bagnoli & McKee, 1991; Feld & Frey, 2002; Frey & Torgler, 2007; Song & Yarbrough, 1978). According to some researchers, there is “a strong connection between tax payments and the supply of public goods” (Alm & Torgler, 2006, p. 243). Given that, it is important to identify the various ethnic groups’ satisfaction and perceptions towards types of tax spending as it may affect their willingness to comply. 2.3.4 Intra-cultural studies on tax compliance Recognising the cultural diversity of countries, there have been several attempts to study the cultural effects on tax compliance from people within the same country. Frey (2003) found that southern Italians have lower levels of civic virtue than northern Italians. Similarly, Ockenfels and Weimann (1999) discovered that former East Germans are less cooperative than former West Germans in public goods contribution. However, more recent research shows that former East Germans demonstrate higher tax morale than former West Germans and “the cultural background seems to have an effect on tax morale” (Torgler, 2007, p. 232).
Image of page 31
18 In an attempt to study New Zealand ethnicity and tax evasion attitudes, Birch et al. (2003) surveyed tertiary accounting, taxation and continuing education students in Christchurch, New Zealand. Their research found that 51 percent of European and 28 percent of Chinese students admitted to understating their taxable incomes in the five
Image of page 32
Image of page 33

You've reached the end of your free preview.

Want to read all 241 pages?

  • Fall '16
  • tax compliance, SME Operators

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes