Shaming of Tax Evaders: Empirical Evidence on Perceptions of Retributive Justice and Tax Compliance Intentions

Although naming-and-shaming (shaming) is a commonly used tax enforcement mechanism, little is known about the efficacy of shaming tax evaders. Through two experiments, this study examines the effects of shaming tax evaders on third-party observers’ perceptions of retributive justice and tax compliance intentions, and whether the salience of persuasion of observers moderates these relationships. Based on insights from defiance theory, the message learning model, and persuasive communications, this study predicts and finds that shaming evaders increases observers’ tax compliance intentions. Furthermore, the results show that higher persuasion, which includes sanction and normative appeals, affects observers’ tax compliance intentions. This study also suggests that shaming has a positive effect on perceptions of retributive justice. Importantly, the results reveal that perceptions of retributive justice in shaming punishment mediate the effect of shaming on tax compliance intentions. The implications for theory and practice are discussed.

The Impact of Tax Audit and Corruption Perception on Tax Evasion

This study is aimed to determine the impact of tax audit intensity and perception of corruption on tax evasion activities. Some research that explains the impact of tax audit on tax evasion tends to give a varied result one and another. It is reasonable to assume that there is another factor that simultaneously influences tax evasion. Tax audit and perception of corruption were chosen because of their relevance and intertwine relation in tax authorities function and program, namely tax enforcement and the eradication of corruption. This research is also in line with the challenges faced by many countries in increasing tax compliance. We conduct a panel data regression method with a fixed effect model. We found that tax audit proved insignificant to tax evasion, and perception of corruption positively significant to tax evasion. We conclude that corruption significantly increases tax evasion and undermine the benefit of tax audit

The Unintended Consequence of Land Finance: Evidence from Corporate Tax Avoidance

Using a large sample of unlisted industrial firms in China, we find that a decrease in local governments’ land transfer revenues leads to lower tax avoidance by firms within their jurisdiction. Our cross-sectional variation tests suggest that the tax-avoidance-reduction effect is stronger in cities with higher land finance dependence and government intervention, as well as where the political leaders have stronger promotion incentives. However, the effect is moderated for politically connected firms. Further analysis reveals that intensified tax enforcement is the mechanism through which land transfer revenue losses result in decreased tax avoidance. Our study offers novel evidence on a previously underexplored determinant of corporate tax avoidance through the lens of land finance. This paper was accepted by Gustavo Manso, finance.

Tax enforcement and private firms' audited financial statements: the moderating role of secrecy culture

PurposeThe research aims to investigate the moderating role of secrecy culture on the effect of tax enforcement on the likelihood that private firms hire external auditors.Design/methodology/approachThe study generates more than 70,000 observations from 83 country-years from the World Bank Enterprise Survey 2018 dataset. Because the study focuses on private firms in emerging countries, data on publicly listed firms and firms from OECD (Organisation for Economic Co-operation and Development) countries are deleted. The secrecy culture data are generated from Hofstede's website. The data are then analyzed with logit analyses because the dependent variable is binary.FindingsThe results demonstrate that tax enforcement increases the likelihood that private firms hire external auditors. Further, secrecy culture weakens the relationship between tax enforcement and audit demand.Practical implicationsGovernments in emerging countries need to encourage private firms to hire external auditors by intensifying tax enforcement because private firms often do not appreciate the importance of high-quality financial statements. However, secretive national culture may reduce tax enforcement's effectiveness in motivating private firms to hire external auditors. Hence, governments of highly secretive countries need to address this issue and find alternative ways to promote audited financial statements.Originality/valueAudit demand of private firms in emerging countries is relatively understudied, especially concerning tax enforcement. Furthermore, the research also focuses on the moderating role of national culture (secrecy) in explaining the relationship between tax enforcement and audit demand.

Enforcement On Land Tax Arrears in Malaysia: A Framework Based on National Land Code 1965

Tax enforcement is needed in the forms of negative incentives such as sanctions, penalties and property forfeiture to deter non-compliance on the property tax payment conduct by the taxpayers. To implement such legal actions and proceedings effectively, it is crucial for tax authority to have a set of complete process flow of the enforcement as part of the enforcement framework to ensure the law is enforced with utmost fair manner. Thus, this article aims to establish a comprehensive enforcement workflow of land tax arrears in Malaysia based on the legislations provided in the National Land Code 1965. This is done by carrying out a content analysis of the legislation in force in National Land Codes 1965, which regulates the enforcement actions by the Land Administrators and State Authorities on the land tax arrears. The authors have performed the validation of the workflow by conducting semi structured interviews with land matter experts from at the federal level and Land Administrator (state level). This article will fill the gap in discussions on complete process flow of enforcement against land tax arrears outlined by National Land Code 1965.

Citizen Tax Juries: Democratizing Tax Enforcement after the Panama Papers

Four years after the Panama Papers scandal, tax avoidance remains an urgent moral-political problem. Moving beyond both the academic and policy mainstream, I advocate the “democratization of tax enforcement,” by which I mean systematic efforts to make tax avoiders accountable to the judgment of ordinary citizens. Both individual oligarchs and multinational corporations have access to sophisticated tax avoidance strategies that impose significant fiscal costs on democracies and exacerbate preexisting distributive and political inequalities. Yet much contemporary tax sheltering occurs within the letter of the law, rendering criminal sanctions ineffective. In response, I argue for the creation of Citizen Tax Juries, deliberative minipublics empowered to scrutinize tax avoiders, demand accountability, and facilitate concrete reforms. This proposal thus responds to the wider aspiration, within contemporary democratic theory, to secure more popular control over essential economic processes.