There have been various intra cultural studies on ethnicities and tax

There have been various intra cultural studies on

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There have been various intra-cultural studies on ethnicities and tax compliance with students, general taxpayers and SME operators (Birch, Peters, & Sawyer, 2003; Coleman & Freeman, 1994, 1997; Kasipillai & Abdul-Jabbar, 2006; Rothengatter, 2005a; Song & Yarbrough, 1978). However their focus was on tax evasion and noncompliance attitudes, where existing literature had proven that not everyone had the intention or predisposition to cheat on their taxes (Alm, 1999; Long & Swingen, 1991; Pyle, 1991). A more beneficial study would be to consider what taxpayers do to comply, because not all taxpayers have the intention or want to evade taxes due to their tax morale (Frey & Torgler, 2007; Torgler, 2003). Tax morale is defined as “a moral obligation to pay taxes, a belief in contributing to society by paying taxes” (Torgler & Schneider, 2007, p. 444) and is closely related to taxpayer ethics, which is “the norm of behaviour governing citizens as taxpayers in their relationship with the government” (Song & Yarbrough, 1978, p. 443). Furthermore, there are tax penalties if taxpayers are caught cheating (Ahmed & Braithwaite, 2005; D. Ho & Wong, 2008).
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6 Research has shown the links between: culture and innovations amongst entrepreneurs (Mueller & Thomas, 2001; Shane, 1993a); business success (S. Lee & Peterson, 2000); and networking (W. Allen, 2000; Ram, 1994). However, little is known about culture and the tax compliance behaviours of business operators, despite taxation being one of their primary business concerns (Cullen, Swain, & Wright, 2001; Evans et al., 2005; Joulfaian & Rider, 1998). Given that, it is worthwhile determining whether cultural values brought about by the ethnicity of SME operators affect their tax compliance behaviours and perceptions. 1.3 Rationale for the study Most research on SMEs thus far has not considered the interface of culture (brought about by ethnicity) and tax compliance. However the study of culture is important as “the efficacy with which a culture equips a people to deal with situations it faces is seldom explored, yet it is one of the most important determinants of advantage and disadvantage” (Crocombe, 2008, p. 150). Though the study of ethnicity is considered an emerging issue in tax compliance research (Birch et al., 2003), this research limits the study of ethnicity to SME taxpayers. SME taxpayers are unique as they: have regressive tax compliance costs (Hasseldine, 1995); have lower compliance statistics compared to other taxpayers (Giles & Caragata, 1999; K. Smith & Kinsey, 1987); are tax collectors on behalf of the government for employment and value added taxes (Committee of Experts, 1998; Joulfaian & Rider, 1998); and have more opportunities to participate in the cash economy (Kirchler, 2007; Noble, 2000). The rationale for this research is to determine whether SME taxpayers are culturally homogeneous in terms of their tax compliance behaviours and perceptions whilst regulated by a Western tax regime.
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  • Fall '16
  • tax compliance, SME Operators

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