3.2.2. Tax payer duties and tax compliance

In this stage, the hypotheses H3 and H5 will be assessed together, and the tax compliance and tax payer duties relationship will be observed. Complying with tax duties on time and in the way it must be done is closely related to efforts to create a social norm. Leder et al. stated that


Table 6. Tax compliance-tax consciousness relationship.

stages will be followed: (1) tax consciousness and tax compliance, (2) tax payer duties and tax

In this stage, the hypotheses H1 and H2 will be assessed together and the tax compliance and

For tax compliance, the financial, economic, and social meaning of taxes must be understood by the tax payers. Leder et al. reported that information campaigns about taxes financing public goods and services increase consciousness of tax payers about the importance of taxes, strengthen their perceptions toward financial change, and increase their compliance levels [21]. Likewise, Karakostas and Zizzo also stated that especially implementations like advertise-

with a mid-sized magnitude. As Table 6 shows, 45.3% of the participants agreed with both statements. An interesting result arose about the relationship between "being a good citizen" and "contributing to national development." In total, 6.5% of the participants agreed with being a good citizen, but disagreed with contributing to national development. Considering that participants were university students, it may be argued that even though the result covers a few people, the participants have awareness of the liability of the tax payer in terms of being a good citizen, but they do not completely grasp the economic effects of paying taxes and/or

In this stage, the hypotheses H3 and H5 will be assessed together, and the tax compliance and tax payer duties relationship will be observed. Complying with tax duties on time and in the way it must be done is closely related to efforts to create a social norm. Leder et al. stated that

) numbers indicate that the relationship is positive

compliance, and (3) trusting the tax administration and tax compliance.

Graph 3. The percentage distribution of the H6 and H7 hypotheses. Source. Author's calculation.

ments support the concept of norm creation toward tax compliance [22].

they do not think the collected taxes are used for the development.

3.2.1. Tax compliance and tax consciousness

202 Taxes and Taxation Trends

Significance level (P) and chi-squared (χ<sup>2</sup>

3.2.2. Tax payer duties and tax compliance

tax consciousness relationship will be observed.

when there is a low level of tax compliance, strict policies to prevent tax evasion are not enough, but an effort to create a social norm is important [21]. Cummings et al. also stated that inspection bodies are effective on social norms about tax compliance, and these norms are dependent on the tax regime and the state's willingness to satisfy citizens' demands [23]. On the other hand, Feld and Larsen indicated that social norms and deterrence should be used simultaneously [24].

The hypothesis H3 denotes the relationship between tax compliance and making declarations on time, which is the first duty in tax responsibilities. The crossexamination here is making declarations on time and being aware of the importance of taxes in national development. Level of significance (P) and chi-squared (χ<sup>2</sup> ) numbers indicate a positive relationship with mid-sized magnitude. As it may be seen in Table 7, 47.6% of participants believe in the existence of this relationship. Similar to the interesting result of the previous test, 8% of the participants agreed with the timely submission of declarations, while they did not think taxes have a relationship with the national development.

Lewis et al. observed that level of inspections affects tax compliance, and high inspection rates on tax evasion increased the voluntary tax compliance [25]. However, in Kastlunger et al. (2009), it was seen that inspections without increasing and/or strengthening tax compliance lead tax payers to invent new ways to evade taxes [26].

As the sensitivity to pay tax debts, as indicated in H5, is related to being a good citizen and the importance of taxes in national development, Tables 8 and 9 may be considered together. The levels of significance (P) and chi-squared (χ<sup>2</sup> ) numbers in both tests show that there is a


A compliant tax payer is sensitive

Total

that the students are aware of tax as a compulsory and required liability, rather than being aware of taxes associated with being a good citizen. Kogler et al. stated that issuing feedback to tax payers in a timely manner about tax inspections creates positive effects on tax compliance [27]. Likewise, Castro and Scartascini found that tax payers who received feedback about deterrents to tax crimes had 5% higher amounts of positive behaviors than those who did not

Somewhat Agree

Keystones of Performing a Proper Tax Policy Design for Tax Compliance: Does Perception of Tax Compliance…

Total Frequency 49 90 146 285

A compliant tax payer gained this trait as they think paying taxes helps national development

http://dx.doi.org/10.5772/intechopen.70816

Disagree Somewhat Agree

% 4.9% 2.5% 1.8% 9.1%

% 6.7% 23.9% 44.9% 75.4%

% 17.2% 31.6% 51.2% 100.0%

Frequency 16 15 13 44 % 5.6% 5.3% 4.6% 15.4%

Disagree Frequency 14 7 5 26

Agree Frequency 19 68 128 215

Total

205

Agree

Similarly, 44.9% of the participants in the test as shown in Table 6 above agreed with both statements. However, even though 6.7% agreed with sensitivity to pay tax debts, they disagreed with the importance of paying taxes for national development or that it will increase tax compliance. The relationship has the same direction as it is stated in the previous test.

Hypotheses H6 and H7 were crossexamined, and the relationship between trusting the tax

Cummings et al. (2009) found that administration's quality of management has an observable effect on tax compliance [23]. Şafaklı and Kutlay (2014) indicated that the tax administration having strategic plans toward knowledge of tax payers of tax laws will increase tax conscious-

Table 10 shows the relationship of H6, which suggests that the tax administration provides correct and fast service and this increases tax compliance and the test of submitting declarations on time, which is the first duty in tax requirements. The level of significance (P) and

receive feedbacks [28].

Source. Author's calculation.

A compliant tax payer is sensitive about paying

χ<sup>2</sup> = 50.849 Level of significance (P) = 0.000

Table 9. Tax compliance-tax payer duties relationship 3.

their tax debts

3.2.3. Trusting the tax administration and tax compliance

administration and tax compliance was investigated.

ness and therefore tax compliance [29].

Table 7. Tax compliance-tax payer duties relationship 1.


Table 8. Tax compliance-tax payer duties relationship 2.

positive relationship, while the first relationship has a small magnitude and the second has a mid-sized magnitude. Even though 60.9% participants in the first test agree with both statements in Table 5, the distinctive finding is that 5.4% of the participants agree with sensitivity to pay debts, while disagreeing with being a good citizen relationship. This may be explained by


Table 9. Tax compliance-tax payer duties relationship 3.

that the students are aware of tax as a compulsory and required liability, rather than being aware of taxes associated with being a good citizen. Kogler et al. stated that issuing feedback to tax payers in a timely manner about tax inspections creates positive effects on tax compliance [27]. Likewise, Castro and Scartascini found that tax payers who received feedback about deterrents to tax crimes had 5% higher amounts of positive behaviors than those who did not receive feedbacks [28].

Similarly, 44.9% of the participants in the test as shown in Table 6 above agreed with both statements. However, even though 6.7% agreed with sensitivity to pay tax debts, they disagreed with the importance of paying taxes for national development or that it will increase tax compliance. The relationship has the same direction as it is stated in the previous test.

#### 3.2.3. Trusting the tax administration and tax compliance

positive relationship, while the first relationship has a small magnitude and the second has a mid-sized magnitude. Even though 60.9% participants in the first test agree with both statements in Table 5, the distinctive finding is that 5.4% of the participants agree with sensitivity to pay debts, while disagreeing with being a good citizen relationship. This may be explained by

Somewhat Agree

Total Frequency 25 41 210 276

A compliant tax payer makes their

χ<sup>2</sup> = 50.782 Level of significance (P) = 0.000

Being a tax payer who shows the required compliance means being a good citizen

χ<sup>2</sup> = 37.254 Level of significance (P) = 0.000

Table 8. Tax compliance-tax payer duties relationship 2.

Source. Author's calculation

Table 7. Tax compliance-tax payer duties relationship 1.

Source. Author's calculation

declaration on time

204 Taxes and Taxation Trends

A compliant tax payer is sensitive about paying their tax debts

Disagree Somewhat Agree

% 3.1% 3.1% .3% 6.6%

% 8.0% 24.5% 47.6% 80.1%

% 17.1% 31.5% 51.4% 100.0%

A compliant tax payer is sensitive about paying their

Disagree Somewhat Agree

% 3.3% 2.9% 5.4% 11.6%

% 3.3% 7.2% 60.9% 71.4%

% 9.1% 14.9% 76.1% 100.0%

Frequency 7 13 27 47 % 2.5% 4.7% 9.8% 17.0%

tax debts

Disagree Frequency 9 8 15 32

Agree Frequency 9 20 168 197

Frequency 17 11 10 38 % 5.9% 3.8% 3.5% 13.3%

Disagree Frequency 9 9 1 19

Agree Frequency 23 70 136 229

Somewhat Agree

Total Frequency 49 90 147 286

Total

Total

Agree

Agree

Hypotheses H6 and H7 were crossexamined, and the relationship between trusting the tax administration and tax compliance was investigated.

Cummings et al. (2009) found that administration's quality of management has an observable effect on tax compliance [23]. Şafaklı and Kutlay (2014) indicated that the tax administration having strategic plans toward knowledge of tax payers of tax laws will increase tax consciousness and therefore tax compliance [29].

Table 10 shows the relationship of H6, which suggests that the tax administration provides correct and fast service and this increases tax compliance and the test of submitting declarations on time, which is the first duty in tax requirements. The level of significance (P) and

A compliant tax payer gained this trait because the tax administration provided correct and fast service Total

4. Discussion

Source. Author's calculation.

tions and the departments they study in. Findings of the study were listed below:

A compliant tax payer gained this trait because the tax administration provided correct and fast service

χ<sup>2</sup> = 97.107 Level of significance (P) = 0.000

ing information about taxes should be made.

This study tests tax compliance in terms of university students, who have not yet completely experienced taxpaying implementations. The perception of tax compliance was tested on students who are expected to show high consciousness about taxes because of their qualifica-

Somewhat Agree

Keystones of Performing a Proper Tax Policy Design for Tax Compliance: Does Perception of Tax Compliance…

Total Frequency 68 92 126 286

A compliant tax payer gained this trait because the tax administration provided correct information about calculated tax payments

http://dx.doi.org/10.5772/intechopen.70816

Disagree Somewhat Agree

% 15.7% 10.1% 5.6% 31.5%

% 3.1% 6.3% 28.3% 37.8%

% 23.8% 32.2% 44.1% 100.0%

Frequency 14 45 29 88 % 4.9% 15.7% 10.1% 30.8%

Disagree Frequency 45 29 16 90

Agree Frequency 9 18 81 108

Total

207

Agree

• In terms of tax consciousness and tax compliance, it was seen that students agree that

On the contrary, Leder et al. in which mentioned that importance of information campaigns about taxes financing public goods and services increasing the compliance level, students do not agree with the importance of taxes in national development [21]. This means that convinc-

• In terms of tax compliance and tax payer duties, students perceive the sensitivity submit-

Feld and Larsen (2012) indicated that social norms and deterrence should be applied simultaneously and Lewis et al. (2009) observed that high inspection rates on tax evasion increase the voluntary tax compliance, and students realizing this as a civic duty tax obligation should be

paying taxes completes the concept of being a good citizen.

Table 11. Tax compliance and trusting the tax administration relationship 2.

ting declarations on time and showing care in paying tax debts.


Table 10. Tax compliance and trusting the tax administration relationship 1.

chi-squared (χ<sup>2</sup> ) numbers show that there is a positive relationship, while it has a small magnitude. In total, 34.8% of the participants agreed with both statements. However, even though 22.6% agreed with the importance of submitting declarations on time, they did not agree that the tax administration works fast and correctly. It may be that students who have not experienced the tax implementation are missing trust in the tax administration or they have not developed it yet.

Kogler et al. reported that the highest tax compliance and the lowest tax evasion are experienced in countries where the authority is seen trusted and effective by citizens. They argued that the state should win the citizens' trust with generally fair implementations and serviceoriented behavior [20]. Verboon and Dijke stated the importance of the authorities' fair treatment of citizens in increasing tax compliance, therefore increasing the effectiveness of their sanctions [30].

When the hypotheses H6 and H7 are considered together, as shown in Table 11, significance level (P) and chi-squared (χ<sup>2</sup> ) numbers show a positive relationship with high magnitude. In total, 28.3% of the participants agreed with both statements. However, 15.7% of the participants disagreed with both statements. Both statements test the trust in the tax administration, and the number of people who chose to disagree is noteworthy. Leder et al. (2010) stated that if the tax administration shows transparency in disclosing final data about financial transition, it will be able to gain tax payers' trust, which is extremely important for tax compliance [21]. Litina and Palivos argued that individuals (tax payers) who believe that the tax administration is honest will have very high probability to respond to sanctions positively [31].


Table 11. Tax compliance and trusting the tax administration relationship 2.
