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It is difficult to understand tax morale among taxpayers. Thus, taxpayers’ reaction to payment of taxes should focus on tax compliance and tax evasion in order to understand underlying behaviours that influence tax payment and evasion and get insights on such reactions. This may help tax authorities to understand factors that could drive tax morale, behaviours, and facility tax payment.
Taxpayers’ willingness to remit their taxes may depend on several factors, including the tax structures, institutions, and behaviours of tax authorities. In most cases, taxpayers note that they do not avoid tax payment willingly. Taxpayers claim that other financial obligations hinder them from payment. Generally, taxpayers consider payment of tax as ‘insignificant’ when faced with economic challenges. Thus, the main challenge has been perceived economic difficulties and employment status. That is, people who experience financial difficulties could have several reasons to justify tax evasion. In addition, educational attainment among taxpayers could also influence their reactions to tax payment. Still, individuals who are in self-employment have low tax morale than others in full-time occupations.
From a perspective of a state policy on tax payment, questions that focus on the role of the government or tax officials are perhaps the most critical ones. Taxpayers have high tax morale when they trust and are satisfied with the regime. Moreover, such governments must provide services to taxpayers as a part of social contract with society. Taxpayers pay taxes when they expect such public goods and services. This would enhance the legitimacy of a government and taxpayers’ morale. Thus, social benefits and public goods from taxes promote positive reactions among taxpayers. Still, it is imperative to recognise that effective tax codes and taxpayers’ trust in the legal system of a state could result in higher tax morale and positive reactions. This is critical in emerging economies in which the public’s trust in such institutions and the government is low. Thus, corruption could lead to negative reactions among taxpayers. In other words, taxpayers would attempt to evade taxes if they perceive their governments as corrupt or rank low in legitimacy. Therefore, it is imperative for governments to enhance their public images, tax administration, structures, and behaviours of tax officials. Institutional changes, which involve accountability and transparency within the public sector would result in high tax morale and strengthen taxpayers’ tax compliance behaviours. This may also require governments to integrate taxpayers in the process of tax administration.
Some individual characteristics also affect tax behaviours. For instance, individuals who tended to be devoted to religions react to tax payment positively. Age also influences a person’s reaction to payment of tax. People in their middle age and old age report few cases of tax evasion relative to young adults. The issue of gender and tax payment remains controversial. Majorities believe that women were likely to have high tax morale, but some studies have reported negative outcomes.
In general, past studies have shown that several factors influence taxpayers’ reaction to tax payment. While such studies have concentrated on tax compliance and tax evasion, they have done little to provide insights on tax morale, taxpayers’ behaviours, individual characteristics, and the role of the government in influencing taxpayers’ reaction to tax payment. Taxpayers, like any other individuals, also react to positive incentives, which the government must provide to raise their tax morale and behaviours.
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