Issues on compliance and ethics in taxation: what do we know?
| Pages | 369-382 |
| DOI | https://doi.org/10.1108/13590790810907218 |
| Date | 10 October 2008 |
| Published date | 10 October 2008 |
| Author | Daniel Ho,Brossa Wong |
| Subject Matter | Accounting & finance |
Issues on compliance and ethics
in taxation: what do we know?
Daniel Ho
Department of Accountancy and Law, School of Business,
Hong Kong Baptist University, Kowloon Tong, Hong Kong, and
Brossa Wong
Department of Accountancy, Lingnan University, Tuen Mun, Hong Kong
Abstract
Purpose – To better understand the issues on compliance and ethics in taxation, this paper reviews
and discusses the extant literature with a focus on individual taxpayers. As prior studies mainly provide
tax compliance and ethics information in the USA, this paper attempts to explore similar issues in a
non-US economy by articulating real-life perspectives of tax compliance behavior in Hong Kong.
Design/methodology/approach – The first part of this study undertakes an extensive review of
literature on compliance and ethics in taxation. The second part of this study provides real-life perspectives
of tax compliance behaviorfor individualtaxpayers by examiningthree informaltax cases in Hong Kong.
Findings – The first major finding from literature review is that ethical beliefs could be an effective
means to improve tax compliance, particularly for taxpayers with lower levels of moral development.
Secondly, as tax compliance rate is higher when taxpayer has a stronger moral belief that tax evasion
is not ethical, a stronger enforcement effort might have a positive overall effect on tax compliance.
Research limitations/implications – In Hong Kong, there is a lack of general ethics education for
the public. The authors therefore suggest the introduction of general ethics education for all citizens in
Hong Kong to enhance level of moral development in order to improve tax compliance at large.
Originality/value – The examination of the actions of taxpayers provides insightful information on
tax compliance and ethics issues as prior research suggests that ethics ultimately lies in actions and
hence actions should be used to study the ethical development.
Keywords Ethics, Taxation,Hong Kong
Paper type Research paper
Introduction
In every jurisdiction, tax authorities are empowered to collect revenue from taxpayers.
Although there are a number of taxpayers who have reported their income and paid their
tax liabilities properly, there are a few taxpayers who have not done so. When faced
with tax moral dilemmas, it is generally believed that ethics can serve as guidelines for
taxpayers on how to act rightly and justly. In order to better understand the issues on
compliance and ethics in taxation, this paper reviews and discusses the extant literature
with a focus on individual taxpayers. As prior studies mainly provide tax compliance
and ethics information in the USA, this paper attempts to explore similar issues in a
non-US economy by articulating real-life perspectives of tax compliance behavior in
Hong Kong which is a cosmopolitan Asian city where many people from the eastern and
western parts of the world are working together. Such an examination of the actions of
taxpayers will provide insightful information on tax compliance and ethics issues as
“morality (ethics) ultimately lies in action and that the study of moral (ethical )
development should use action as final criterion” (Blasi, 1980, p. 1, italics words added).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
Issues on
compliance and
ethics in taxation
369
Journal of Financial Crime
Vol. 15 No. 4, 2008
pp. 369-382
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790810907218
To continue reading
Request your trial