The Effect of Vertical and Horizontal Trust on Voluntary Tax Compliance (An Experimental Study)

DOI

10.2991/iconeg-16.2017.4How to use a DOI?

Keywords

Vertical Trust; Horizontal Trust; Tax Compliance; Tax Authority

Abstract

Every country, with a voluntary tax collection system, should consider the potential tax evasion. The economics of crime approach which is expected to increase tax compliance is still constrained by considerable amount of administrative costs. Trust-based regulation can reduce the social costs for taxpayers and tax authorities. This study examines the effect of the trust of taxpayers to the tax authority and other taxpayers on voluntary tax compliance in laboratory experiments. The subject of this study is MSMEs business people who have already got Tax ID Number (TIN). Factorial design used is 2 x 2 using tools such as booklets, videos and storyboards. The results of this study provide empirical evidence that supports the main effect of vertical trust and horizontal trust on tax compliance. Hypothesis 3 predicts the effect of the interaction between the trust to tax authority and the trust to other taxpayers on the amount of income reported. However, the results of the analysis show no interaction, which means that fair treatment from the authorities is not a stimulant for taxpayers to contribute to pay taxes.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Ivonne Helena Putong
AU  - Arsono Laksmana
AU  - I Made Narsa
PY  - 2016/12
DA  - 2016/12
TI  - The Effect of Vertical and Horizontal Trust on Voluntary Tax Compliance (An Experimental Study)
BT  - Proceedings of the International Conference on Ethics in Governance (ICONEG 2016)
PB  - Atlantis Press
SP  - 15
EP  - 19
SN  - 2352-5398
UR  - https://doi.org/10.2991/iconeg-16.2017.4
DO  - 10.2991/iconeg-16.2017.4
ID  - HelenaPutong2016/12
ER  -