Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/joepsy/v40y2014icp200-219.html
   My bibliography  Save this article

Compliance costs caused by agency action? Empirical evidence and implications for tax compliance

Author

Listed:
  • Eichfelder, Sebastian
  • Kegels, Chantal
Abstract
Compliance costs of taxpayers should not only be affected by the tax law itself but also by its implementation through the tax authorities. In this paper we analyze the effect of authority behavior on the burden of complying with tax regulations. Using survey data of Belgian businesses, we develop an estimation strategy to overcome simultaneity bias by the construction of proxy variables. According to our estimate, a customer-unfriendly tax administration increases the average compliance burden by about 27%. Our outcome has interesting implications for further research. First of all, authority behavior does not only affect “soft” tax compliance factors like fairness and trust, but also “hard” aspects like costs. Second, the distribution of administrative cost burdens between the taxpayer side and the authorities may be important regarding the cost-efficiency of the tax system as a whole.

Suggested Citation

  • Eichfelder, Sebastian & Kegels, Chantal, 2014. "Compliance costs caused by agency action? Empirical evidence and implications for tax compliance," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 200-219.
    • Handle: RePEc:eee:joepsy:v:40:y:2014:i:c:p:200-219
    DOI: 10.1016/j.joep.2012.08.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167487012000980
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.joep.2012.08.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stephan Muehlbacher & Erich Kirchler, 2010. "Tax Compliance by Trust and Power of Authorities," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 607-610.
    2. Kirchler, Erich & Hoelzl, Erik & Wahl, Ingrid, 2008. "Enforced versus voluntary tax compliance: The "slippery slope" framework," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 210-225, April.
    3. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    4. Alm, James & Cherry, Todd & Jones, Michael & McKee, Michael, 2010. "Taxpayer information assistance services and tax compliance behavior," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 577-586, August.
    5. Cullis, John G. & Lewis, Alan, 1997. "Why people pay taxes: From a conventional economic model to a model of social convention," Journal of Economic Psychology, Elsevier, vol. 18(2-3), pages 305-321, April.
    6. Torgler, Benno & Schneider, Friedrich, 2009. "The impact of tax morale and institutional quality on the shadow economy," Journal of Economic Psychology, Elsevier, vol. 30(2), pages 228-245, April.
    7. Stephan Muehlbacher & Erich Kirchler & Herbert Schwarzenberger, 2011. "Voluntary versus enforced tax compliance: empirical evidence for the “slippery slope” framework," European Journal of Law and Economics, Springer, vol. 32(1), pages 89-97, August.
    8. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    9. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    10. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
    11. Sascha Hokamp & Michael Pickhardt, 2010. "Income Tax Evasion in a Society of Heterogeneous Agents - Evidence from an Agent-based Model," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 541-553.
    12. McKee, Michael & Siladke, Caleb & Vossler, Christian A., 2011. "Behavioral dynamics of tax compliance under an information services initiative," MPRA Paper 38865, University Library of Munich, Germany.
    13. Tran-Nam, Binh & Evans, Chris & Walpole, Michael & Ritchie, Katherine, 2000. "Tax Compliance Costs: Research Methodology and Empirical Evidence From Australia," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(2), pages 229-252, June.
    14. Slemrod, Joel & Blumenthal, Marsha & Christian, Charles, 2001. "Taxpayer response to an increased probability of audit: evidence from a controlled experiment in Minnesota," Journal of Public Economics, Elsevier, vol. 79(3), pages 455-483, March.
    15. Alm, James & Jackson, Betty & McKee, Michael, 1992. "Institutional Uncertainty and Taxpayer Compliance," American Economic Review, American Economic Association, vol. 82(4), pages 1018-1026, September.
    16. Sebastian Eichfelder & Michael Schorn, 2012. "Tax Compliance Costs: A Business-Administration Perspective," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(2), pages 191-230, June.
    17. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 125-38, March.
    18. Vaneeta Rani & R S Arora, 2011. "Perception of Tax Professionals Regarding Income Tax Administration in India," The IUP Journal of Public Finance, IUP Publications, vol. 0(4), pages 41-55, November.
    19. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    20. Tran-Nam, Binh & Evans, Chris & Walpole, Michael & Ritchie, Katherine, 2000. "Tax Compliance Costs: Research Methodology and Empirical Evidence from Australia," National Tax Journal, National Tax Association, vol. 53(n. 2), pages 229-52, June.
    21. Sebastian Eichfelder & Chantal Kegels, 2012. "Compliance costs caused by agency action? Empirical evidence and implications for tax compliance," Schumpeter Discussion Papers sdp12005, Universitätsbibliothek Wuppertal, University Library.
    22. Sebastian Eichfelder & Chantal Kegels, 2010. "Working Paper 09-10 - Shifting of red tape? The impact of authority behavior on tax compliance costs," Working Papers 1009, Federal Planning Bureau, Belgium.
    23. van Dijke, Marius & Verboon, Peter, 2010. "Trust in authorities as a boundary condition to procedural fairness effects on tax compliance," Journal of Economic Psychology, Elsevier, vol. 31(1), pages 80-91, February.
    24. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence From a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(1), pages 125-138, March.
    25. Kate Krause, 2000. "Tax Complexity: Problem or Opportunity?," Public Finance Review, , vol. 28(5), pages 395-414, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eichfelder, Sebastian & Hechtner, Frank, 2016. "Tax compliance costs: Cost burden and cost reliability," arqus Discussion Papers in Quantitative Tax Research 212, arqus - Arbeitskreis Quantitative Steuerlehre.
    2. Salvatore Capasso & Lorenzo Cicatiello & Elina De Simone & Lodovico Santoro, 2022. "Corruption and tax revenues: Evidence from Italian regions," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(4), pages 1129-1152, December.
    3. Janina Enachescu & Maximilian Zieser & Eva Hofmann & Erich Kirchler, 2019. "Horizontal Monitoring in Austria: subjective representations by tax officials and company employees," Business Research, Springer;German Academic Association for Business Research, vol. 12(1), pages 75-94, April.
    4. Jonathan Farrar & Dawn W. Massey & Errol Osecki & Linda Thorne, 2020. "Tax Fairness: Conceptual Foundations and Empirical Measurement," Journal of Business Ethics, Springer, vol. 162(3), pages 487-503, March.
    5. Dewi Prastiwi & Erlina Diamastuti, 2023. "Building Trust and Enhancing Tax Compliance: The Role of Authoritarian Procedures and Respectful Treatment in Indonesia," JRFM, MDPI, vol. 16(8), pages 1-15, August.
    6. Sebastian Eichfelder & François Vaillancourt, 2014. "Tax Compliance Costs: A Review of Cost Burdens and Cost Structures," Hacienda Pública Española / Review of Public Economics, IEF, vol. 210(3), pages 111-148, September.
    7. Katharina Gangl & Erich Kirchler & Christian Lorenz & Benno Torgler, 2015. "Wealthy Tax Non-Filers in a Developing Nation: The Roles of Taxpayer Knowledge, Perceived Corruption and Service Orientation in Pakistan," CREMA Working Paper Series 2015-08, Center for Research in Economics, Management and the Arts (CREMA).
    8. Frecknall-Hughes, Jane & Gangl, Katharina & Hofmann, Eva & Hartl, Barbara & Kirchler, Erich, 2023. "The influence of tax authorities on the employment of tax practitioners: Empirical evidence from a survey and interview study," Journal of Economic Psychology, Elsevier, vol. 97(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sebastian Eichfelder & Chantal Kegels, 2012. "Compliance costs caused by agency action? Empirical evidence and implications for tax compliance," Schumpeter Discussion Papers sdp12005, Universitätsbibliothek Wuppertal, University Library.
    2. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370.
    3. Colin C Williams & Junhong Yang, 2017. "Tackling falsely-declared salaries in Bulgaria: evidence from a 2015 survey," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 333-351, September.
    4. Kristina M. Bott & Alexander W. Cappelen & Erik Ø. Sørensen & Bertil Tungodden, 2020. "You’ve Got Mail: A Randomized Field Experiment on Tax Evasion," Management Science, INFORMS, vol. 66(7), pages 2801-2819, July.
    5. James, Simon & Alley, Clinton, 2002. "Tax compliance, self-assessment and tax administration," MPRA Paper 26906, University Library of Munich, Germany.
    6. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.
    7. James Alm & William D. Schulze & Carrie von Bose & Jubo Yan, 2019. "Appeals to Social Norms and Taxpayer Compliance," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 638-666, October.
    8. Vossler, Christian A. & McKee, Michael & Bruner, David M., 2021. "Behavioral effects of tax withholding on tax compliance: Implications for information initiatives," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 301-319.
    9. López-Pérez, Raúl & Ramirez-Zamudio, Aldo, 2020. "An experimental test of two policies to increase donations to public projects," International Review of Law and Economics, Elsevier, vol. 62(C).
    10. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    11. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551.
    12. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    13. repec:idq:ictduk:13726 is not listed on IDEAS
    14. Semjén, András, 2017. "Az adózói magatartás különféle magyarázatai [Various explanations for tax compliance]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 140-184.
    15. Philipp Doerrenberg & Andreas Peichl, 2022. "Tax Morale and the Role of Social Norms and Reciprocity - Evidence from a Randomized Survey Experiment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 78(1-2), pages 44-86.
    16. Castro, Lucio & Scartascini, Carlos, 2015. "Tax compliance and enforcement in the pampas evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 65-82.
    17. James Alm & Lilith Burgstaller & Arrita Domi & Amanda März & Matthias Kasper, 2023. "Nudges, Boosts, and Sludge: Using New Behavioral Approaches to Improve Tax Compliance," Economies, MDPI, vol. 11(9), pages 1-22, September.
    18. Alm, James & Cherry, Todd & Jones, Michael & McKee, Michael, 2010. "Taxpayer information assistance services and tax compliance behavior," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 577-586, August.
    19. James Alm & Laura Rosales Cifuentes & Carlos Mauricio Ortiz Niño & Diana Rocha, 2019. "Can Behavioral “Nudges” Improve Compliance? The Case of Colombia Social Protection Contributions," Games, MDPI, vol. 10(4), pages 1-23, October.
    20. Antinyan, Armenak & Asatryan, Zareh, 2019. "Nudging for tax compliance: A meta-analysis," ZEW Discussion Papers 19-055, ZEW - Leibniz Centre for European Economic Research.
    21. Mendoza, Juan P. & Wielhouwer, Jacco L. & Kirchler, Erich, 2017. "The backfiring effect of auditing on tax compliance," Journal of Economic Psychology, Elsevier, vol. 62(C), pages 284-294.

    More about this item

    Keywords

    Tax compliance costs; Red tape; Tax administration; Tax compliance; Tax evasion; Tax authority behavior; Proxy variables; Simultaneity bias;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:40:y:2014:i:c:p:200-219. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/joep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.