Main Article Content
Research aim: Prior to the emergence of the “Slippery Slope Framework”, studies on factors influencing tax compliance considered many independent variables. However, the framework simplified the tax compliance model in a parsimonious way with only two independent variables capable of explaining tax compliance. These are trust in authority and power of authority. In this study, an attempt is made to test the assumptions of the framework using cross-country data with a larger sample from Asia.
Design/ Methodology/ Approach: A cross-sectional data from 41 Asian countries was generated and analysed through Ordinary Least Squares (OLS) regression analysis.
Research finding: From the analysis, trust was found to have a significant influence on tax compliance across the countries investigated, while the power of authority was found to be weak in that regard. The interaction between the two variables in explaining tax compliance was also found to be weak across the sampled countries.
Theoretical contribution/ Originality: Theoretically, the study supports not only the “Slippery Slope Framework” but also Social Exchange Theory as it shows that in social exchange contract such as paying tax by taxpayers and providing public goods and services by the central government. Trust plays an important role as taxpayers expect reciprocation.
Practitioner/ Policy implication: The result highlights to the policymakers in 41 Asian countries that improving tax compliance requires a high level of trust from authorities. Taxpayers seek the judicious use of taxpayers’ money in executing projects and services needed by the nation.
Research limitation/ Implication: Considering additional factors such as antecedents of trust and power will add to the explanation of tax compliance using the framework.
Keywords: Power, Slippery Slope Framework, Tax Compliance, Trust
Type of article: Research paper
JEL Classification: H24, H25, H26
The Asian Journal of Accounting Perspectives (AJAP) articles are published under a licence equivalent to the Creative Commons Attribution-NonCommercial-NoDerivs License (CC BY-NC-ND). The licence allows users to copy, distribute, and transmit an article as long as the author is attributed. The article is not used for commercial purposes. The work is not modified or adapted in any way.
Authors are required to sign the Exclusive License to Publish agreement upon publication in the AJAP. The agreement grants the Publisher (Faculty of Business and Accountancy, Universiti Malaya) to publish and disseminate the articles.
Articles published in the AJAP are digital, online, free of charge, and free of most copyright and licensing restrictions.
Article Processing Charge
Articles publish in AJAP is free submission, production and publication charges. However, all accepted articles are required for language editing. The AJAP officially appointed and outsourced proofreader will conduct this process, and the authors will cover the cost. AJAP does not profit from this process and transaction.
Allingham, M. G., &Sandmo, A. (1972). Income tax evasion: A theoretical analysis Journal of Public Economics, 1(1972), 323-338.
Ayuba, A., Saad, N., &Ariffin, Z. Z. (2018). testing the assumptions of the slippery slope framework on tax compliance: Evidence from Nigerian SMEs.DLSU Business and Economics Review,27(2).
Batrancea, L., &Nichita, R.A. (2014). A bird’s eye view on citizens’ trust in and power of tax authorities in East and South Asia. Annals-Economy Series, 1, 192-202.
Brewster, D. R. (1998). A theory of trust: An exposition of Francis Fukuyama’s" Trust. In The Annual Meeting of the Southwestern Sociological Association, Corpus Christi, Texas.
Central Intelligence Agency. (2017). World Facts Book. Retrieved from https://www.cia.gov/
Cohen, J. (1988). Statistical power analysis for the behavioral sciences. 2nd ed. Hillsdale: Lawrence Erlbaum Associates, NJ.
Curran, P.J., West, S.G., & Finch J.F. (1996). The robustness of test statistics to normality and specification error in confirmatory factor analysis.Psychological Methods, 1(1), 16-29.
Faizal, S. M., Palil, M. R., Maelah, R., & Ramli, R. (2017). Power and trust as factors influencing tax compliance behavior in Malaysia. Asian Journal of Accounting and Governance, 8, 79-85.
Feld, L. P., & Frey, B. S. (2007). Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation. Law and Policy, 29(1), 102-120.
Hair Jr, J. F., Hult, G. T. M., Ringle, C., &Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications.
Jackson. B.R., &Milliron, V.C. (1986). Tax compliance research: Findings, problems, and prospects. Journal of Accounting Literature, 5, 125-65.
Kastlunger, B., Lozza, E., Kirchler, E., &Schabmann, A. (2013). Powerful authorities and trusting citizens: The slippery slope framework and tax compliance in Italy. Journal of Economic Psychology, 34(0), 36-45.
Kaufmann, D., Kraay, A., &Mastruzzi, M. (2010). The worldwide governance indicators: methodology and analytical issues. World Bank Policy Research Working Paper No. 5430. Retrieved from http://ssrn.com/
Kirchler, E., Hoelzl, E., & Wahl, I. (2008). Enforced versus voluntary tax compliance: The “slippery slope” framework. Journal of Economic Psychology, 29(2), 210-225.
Kogler, C., Batrancea, L., Nichita, A., Pantya, J., Belianin, A., &Kirchler, E. (2013). Trust and power as determinants of tax compliance: Testing the assumptions of the slippery slope framework in Austria, Hungary, Romania and Russia. Journal of Economic Psychology, 34(0), 169-180.
Kogler, C., Muehlbacher, S., &Kirchler, E. (2015). Testing the “slippery slope framework” among self-employed taxpayers. Economics of Governance, 16(2), 125-142.
Lisi, G. (2012). Job search theory and the slippery slope framework: an attempt to integration, Working Paper No. 2011-02, Dipartimento di ScienzeEconomicheUniversità di Cassino.
Mardhiah, M., Miranti, R., &Tanton, R. (2019). The slippery slope framework: extending the analysis by investigating factors affecting trust and power (No. 7494). CESifo Group Munich.
Mas’ud, A., Manaf, N. A. A., & Saad, N. (2015). Testing assumptions of the" Slippery Slope Framework" using cross-country data: evidence from Sub-saharan Africa. International Journal of Business and Society, 16(3), 408.
Mas’ud, A., Manaf, N. A. A., & Saad, N. (2014). Do trust and power moderate each other in relation to tax compliance? Procedia-Social and Behavioral Sciences, 164, 49-54.
Muehlbacher, S., &Kirchler, E. (2010). Tax compliance by trust and power of authorities. International Economic Journal, 24(4), 607-610.
Muehlbacher, S., Kirchler, E., &Schwarzenberger, H. (2011). Voluntary versus enforced tax compliance: empirical evidence for the “slippery slope” framework. European Journal of Law and Economics, 32(1), 89-97.
Pellizzari, P., &Rizzi, D. (2014). Citizenship and power in an agent-based model of tax compliance with public expenditure. Journal of Economic Psychology, 40, 35-48.
Prinz, A., Muehlbacher, S., &Kirchler, E. (2014). The slippery slope framework on tax compliance: an attempt to formalization. Journal of Economic Psychology, 40, 20-34.
Riahi-Belkaoui, A. (2004). Relationship between tax compliance internationally and selected determinants of tax morale. Journal of International Accounting, Auditing and Taxation, 13(2), 135-143.
Silvani, C., & Baer, K. (1997). Designing a tax administration reform strategy: experiences and guidelines.
Srinivasan, T. N. (1973). Tax evasion: A model. Journal of public economics, 2(1973), 339-346.
Sweetman, K. (2012). In Asia, power gets in the way. Harvard Business Review, International Business. Retrieved from https://hbr.org/
Torgler, B. (2002). Speaking to theorists and searching for facts: Tax morale and tax compliance in experiments. Journal of Economic Surveys, 16(5), 657-683.
Torgler, B. (2003). Tax morale and institutions.Retrieved from http://ssrn.com/
Torgler, B., & Schneider, F. (2007). What shapes attitudes toward paying taxes? Evidence from multicultural European countries. Social Science Quarterly, 88(2), 443-470.
Torgler, B., & Schneider, F. (2009). The impact of tax morale and institutional quality on the shadow economy. Journal of Economic Psychology, 30(2), 228-245.
Torgler, B., Demir, I. C., Macintyre, A., & Schaffner, M. (2008). Causes and consequences of tax morale: An empirical investigation. Economic Analysis and Policy, 38(2), 313-339.
Torgler, B., Schaffner, M., & Macintyre, A. (2007). Tax compliance, tax morale, and governance quality. International Studies Program Working Paper, Andrew Young School of Policy Studies, Georgia State University.
Transparency International. (2017). Corruption Perception Index 2016. Retrieved from http://www.transparency.org/
Wahl, I., Kastlunger, B., &Kirchler, E. (2010). Trust in authorities and power to enforce tax compliance: An empirical analysis of the “slippery slope framework”. Law and Policy, 32(4), 383-406.
West, S.G., Finch, J.F., &Curran, P.J. (1995). Strictural equation models with nonnormal variables. Structural Equation Modelling: Concepts, Issues, and Applications, 56-75.
World Bank Group. (2017). Worldwide Governance Indicators. Retrieved from http://info.worldbank.org/