Morse et al 2009 Noble 2000 Australian SME operators infrequently contact their

Morse et al 2009 noble 2000 australian sme operators

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conflict with, and sanctions from, the tax authorities (Ahmed & Braithwaite, 2005; S. Morse et al., 2009; Noble, 2000). Australian SME operators infrequently contact their tax authority and they do so only if they have a problem or wish to check on legislation changes (Coleman & Freeman, 1994; Wallschutzky & Gibson, 1993). They prefer written instead of verbal or face-to- face contact (Bird, 1992; Coleman & Freeman, 1994), and they perceive the Australian tax authority as unsympathetic, unaccommodating, judgemental and uninterested in them (Bird, 1992; Murphy, 2003a). SME operators from the food and retailing industries in the United Kingdom also experienced unsatisfactory interactions with the tax auditors (Adams & Webley, 2001). However, the written communication with the tax authorities may be less applicable to some ethnic groups who value relationship building, thus preferring alternative modes of communication. The literature on procedural fairness (Blissenden, 2002; Murphy, 2003b; Tyler, 2006) suggests that feelings of unfair treatment or negative experiences with the tax authority can dampen taxpayers’ voluntary compliance and heighten their resentment towards the tax system (Braithwaite, 2003a). This resentment can result in retaliation, resistance and non-contact with the tax authorities (Braithwaite, 2003a). This stance assumes that all taxpayers have the same view of tax authorities. However, with the increasing cultural diversity of population in most OECD countries, as discussed in section 1.1, some taxpayers who hold authorities in high regard as part of their cultural values may be reluctant to contact the tax authorities willingly. Given that, they may then employ tax practitioners as intermediaries for tax matters. 2.8 Tax practitioners and SMEs The New Zealand self assessment tax regime requires SME taxpayers to voluntarily disclose their tax liabilities with the possibility of an audit occurring as a result of their declarations (James & Alley, 2000). Faced with increasing tax complexity, SMEs are turning to tax practitioners for assistance (Erard, 1993; Klepper & Nagin, 1989b; Marshall et al., 1998; Tan, 1999). With this, tax practitioners can exert significant and direct influence on the compliance level of SME operators (Attwell & Sawyer, 2001;
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31 Klepper, Mazur, & Nagin, 1991). Research shows that some tax practitioners in the United States and Australia have been employed to aggressively exploit ambiguous tax laws to lower their client’s tax liability (Klepper & Nagin, 1989b; S. Morse et al., 2009; Murphy, 2003a), whereas others argue that the primary reason for employing tax practitioners by Australian and New Zealand SMEs is to file accurate tax returns and to minimise the potential conflict with the tax authority (Ahmed & Braithwaite, 2005; Sakurai & Braithwaite, 2003; Tan, 1999). However, little research has been carried out to examine the impact of ethnicity and culture on SME operators’ relationships with, and perception of, their tax practitioners. This is important as it determines their level of voluntary compliance and their overall tax compliance costs. It is by gathering evidence of SME operators’ perceptions and interactions with tax practitioners and tax authority that answers to research question 3 for this thesis will be provided.
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  • tax compliance, SME Operators

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