131 Rationale for studying New Zealand SME operators There are several reasons

131 rationale for studying new zealand sme operators

This preview shows page 20 - 23 out of 241 pages.

1.3.1 Rationale for studying New Zealand SME operators There are several reasons for choosing New Zealand SME taxpayers for the study of ethnicity and tax compliance. First, this country’s culturally diverse population is reflected in the significant percentages of the European, Asian, Maori and Pacific ethnic groups who are in business, as shown in Table 1.1.
Image of page 20
7 Ethnic group (grouped total responses) Total percentage of the ethnic groups in business (2001) Total percentage of the ethnic groups in business (2006) Europeans 21.8 20.8 Maori 9.6 9.8 Pacific Peoples 6 5.9 Asian 21.7 18.5 Table 1.1: Census data – percentage ethnic groups by status in business (excluding paid and unpaid employment) in 2001 and 2006 Source: (Ministry of Economic Development, 2009, p. 37). Despite the significant percentage of non-European groups in business, they all face similar tax compliance requirements. However the process in addressing these requirements may differ in the approach, intensity and priority of the ethnic groups. The self assessment tax regime in New Zealand implicitly assumes European values of independence, achievement, and accountability which may or may not coincide with the cultural values of other ethnic groups. Hence, an intra-cultural study on ethnicity and tax compliance may be appropriate and important to determine how ethnic SME operators perform in terms of filing their tax returns and paying their taxes on time. This is because an understanding of their tax compliance behaviours would provide information to the tax authority, tax practitioners and business community to deploy their resources effectively to meet SMEs’ tax needs. Furthermore, the latest census reported that Asians and Pacific Peoples made up the fastest growing groups in the country (Statistics New Zealand, 2010c) and therefore it is essential to determine if these groups have the same tax compliance behaviours as the Europeans. The knowledge gained from this study can provide insights as to how to effectively assist and monitor these taxpayers, given that some have had business failures resulting from poor tax compliance activities (Prescott & Hooper, 2009). The
Image of page 21
8 tax literature shows that different taxpayers’ behaviours require different regulatory approaches and strategies from the tax authorities (Braithwaite, 2007). New Zealand has been ranked as one of the easiest countries to set up and do business in the world since 2007 (IFC & The World Bank, 2010), with indigenous Maori having one of the highest entrepreneurial indices in 2005 (Frederick & Chittock, 2006). Despite that, the survival rates of SMEs, especially micro businesses, have been low (Ministry of Economic Development, 2009). In addition, the Small Business Advisory Group (SBAG) raised their concerns regarding the high failure rate of “67 percent of Maori businesses compared to only 33 percent of European businesses within 42 months of establishment” (Small Business Advisory Group, 2008, p. 11). The question remains as to why there is the low survival rate among SMEs and why more Maori businesses are failing despite their having one of the highest entrepreneurial indices in the world. One
Image of page 22
Image of page 23

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

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors