would be to consider the tax compliance behaviours of the different ethnic

Would be to consider the tax compliance behaviours of

This preview shows page 35 - 37 out of 241 pages.

would be to consider the tax compliance behaviours of the different ethnic groups within a city or location. In addition, there may be other cultural dimensions beyond collectivism-individualism that can help explain the differences in the students’ tax compliance behaviours. Furthermore, cross-cultural student research has some limitations that should be considered. Students are not good representatives of actual taxpayers since they are younger; have higher education than average citizen (Fehr et al., 2003); and have less taxpaying and working experience than general taxpayers (Cuccia, 1994; Yong, 2006). Heavy punishments, such as jail, cannot possibly be implemented in tax compliance
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22 experiments and surveys. The “absence of social pressures could inhibit the same psychological processes as actual taxpayers which are important in the real world” (Torgler, 2007, p. 11). It is argued that though students are important participants for tax research, their results ought to be interpreted carefully (Webley, Robben, Elffers, & Hessing, 1991) so as not to mislead readers that their compliance behaviours can be equated to that of actual taxpayers. This is important as tax policies and regulatory strategies are targeted at taxpayers and not at students. In an attempt to incorporate several cultural dimensions on tax compliance, Tsakumis et al. (2007) differentiated compliant from non-compliant countries by applying Hofstede’s (2001) four cultural dimensions of individualism-collectivism, power distance, uncertainty avoidance, and masculinity-femininity. They profile non- compliant countries as those with high uncertainty avoidance, low individualism, low masculinity and high power distance values. Their research findings are valuable for international tax comparisons and in identifying audit strategies for taxpayers from different countries. However, there are certain gaps in the research which should be considered. One of the main gaps is the omission of Hofstede’s cultural dimension of long term and short term orientation (Hofstede, 2001; Hofstede & Bond, 1988). This dimension is particularly relevant for Asian countries, given their significant economic development over the last two decades (Hampden-Turner & Trompenaars, 1996; Joynt & Warner, 1996). It may also help provide additional information as to whether individuals choose to comply or not given their orientation towards time and traditions. Richardson (2008) extended the Tsakumis et al. (2007) study by examining in addition to culture, the impact of legal, political, and religious variables on tax evasion across 47 countries. His regression results indicate that the higher the level of uncertainty avoidance and the lower level of individualism, legal enforcement, trust in government, and religiosity, the higher is the level of tax evasion across countries. This adds to the current sparse knowledge of culture and tax evasion. However, his study did not consider Hofstede’s (2001) fifth dimension of long term and short term orientation. In addition, the author admitted that research data used from country survey ratings “could be prone to measurement error” (G. Richardson, 2008, p. 72), though the measurement
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  • tax compliance, SME Operators

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