The effect of personality traits and tax morale on tax evasion intention
| DOI | https://doi.org/10.1108/JFC-02-2021-0026 |
| Published date | 19 May 2021 |
| Date | 19 May 2021 |
| Pages | 272-292 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Godfred Matthew Yaw Owusu,Mary-Ann Bart-Plange,Theodora Aba Abekah Koomson,Miriam Arthur |
The effect of personality traits and
tax morale on tax evasion
intention
Godfred Matthew Yaw Owusu,Mary-Ann Bart-Plange,
Theodora Aba Abekah Koomson and Miriam Arthur
Department of Accounting, Business School, University of Ghana, Accra, Ghana
Abstract
Purpose –This paper aims to explorethe relationship among personality traits, tax morale and tax evasion
intention of students. Using the five-factor model of personality ratings, this study hypothesizes that
agreeableness, openness to experience,conscientiousness, extraversion and neuroticism are good predictors
of both tax morale and tax evasion intentions of individuals. Further, this paper argues that tax morale
correlatesnegatively with tax evasion intention.
Design/methodology/approach –A survey methodwas adopted and questionnaires were developedto
elicit responses for the study. The study hypotheseswere tested structurally using the partial least square-
structuralequation modelling technique.
Findings –The results of the study demonstrate the existence of a positive and statistically significant
relationship between three dimensions of the personality traits (agreeableness, conscientiousness and
openness to experience)and tax morale. Consistent with the expectation, the studyalso finds tax morale to be
significantand negatively associated with tax evasionintention.
Research limitations/implications –This study concludes from the findings that improvingthe tax
morale of individuals could be an important way by which tax authorities can improve voluntary tax
complianceand reduce the incidence of tax evasion by individuals.
Originality/value –The study uses all the dimensionsof the five-factor model to examine the tax evasion
intention of individuals. It also contributes to the theoretical literature by highlightingthe mediating role of
tax morale in the relationship between personality traits and tax evasion intention from an African
perspective.
Keywords Structural equation modelling, Personality traits, Tax morale, Tax evasion intention
Paper type Research paper
Introduction
For decades, countries, especially those classified as developing economies, have struggled
to meet their annual tax targets which have resulted in consistent shortfalls in their total
revenue (Owusu et al.,2020). The attempt to finance the ever-growing publicexpenditure of
such countries has often resulted in a large budget deficit over the years and the over-
reliance on external assistance in a form of donor support to augmentthe revenue shortfalls
(Owusu et al.,2020). While donor support has been pivotal to the developmental efforts of
developing economies in the past, there has been a consistent decline in development
assistance from developed countries to their less developed counterparts since the 2008
financial crisis (Dang et al., 2013). Borrowing from institutions such as the International
Monetary Fund (IMF) and World Bank has become an inevitable option for most of these
countries despite concerns over unfair conditionality mostly associated with such funding
options (Owusu et al.,2020).
JFC
29,1
272
Journalof Financial Crime
Vol.29 No. 1, 2022
pp. 272-292
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-02-2021-0026
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
Against the backdrop that the global economy is virtually on its knees following the
outbreak of the Covid-19 pandemic (Ozili and Arun, 2020), budgetary support from
developed countries to their developing counterparts are more likely to dwindle further in
the coming years which could impact severely on the economic performance of developing
countries. Dependence on external funding sources to finance public expenditure may,
therefore, not be a sustainable optionfor developing countries, and hence, the need to focus
on improving revenue mobilization from other sources such as domestic tax revenues. A
major challenge identified by existing studies on the poor performance of the domestic tax
revenue mobilization by developing countries is the unwillingness of individuals and
corporations to voluntarilyfulfill their tax obligations to the state.
At the individual level, empirical research has consistently shown that a multiplicity of
factors influence the tax compliancebehaviour of citizens (Alleyne and Harris, 2017;Owusu
et al.,2019,2020). As pointed out by Owusu et al. (2019), an understanding of these factors
and how they shape the tax behaviour of individualsis critical in developing the appropriate
strategies to promote responsible tax behaviour. The current study attempts to highlighta
new perspective on individual tax behaviour complexities by examining the concept of
personality traits and the impact it has on tax morale and an individual’sintention to evade
taxes within the context of Ghana.
The objectives of this study are three-fold.Firstly, we examine the concept of personality
traits using the Five-Factor Model (Openness to Experience, Conscientiousness,
Extraversion, Agreeablenessand Neuroticism) and investigate whether these traits are good
predictors of individuals’intrinsic motivation towards the payment of their taxes. Secondly,
we investigate the intentionof individuals to engage in tax evasion and explore the effectsof
tax morale on such intentions. The third and final objective of the study examines the
indirect effect ofpersonality traits on tax evasion intention usingtax morale as a mediator.
The study contributes to the literature on individual tax behaviour complexities by
focusing on the tax evasion intention of individualsand how it is influenced by their distinct
personality traits and tax morale. The findings of this study provide insights into the
determinants of taxmorale and tax evasion intention. Contextually, theevidence provided in
this study is relevant to the tax evasion discourse from an African perspective given the
paucity of empirical studies on the subject matter on the continent. In addition, the study
also contributes theoretically to the literature by highlighting the mediation role of tax
morale in the relationshipbetween personality traits and tax evasionintention.
The rest of the article is organized in four sections as follows: Section2 reviews literature
on tax morale, tax evasion intention, the Five-Factor Model personality traits and the key
hypotheses of the study. This section is followed by a discussion on the data and
methodology in Section 3. The penultimate section describes the empirical analysis and
discussion of results. Conclusions and policy implications of our findings are presented in
Section 5.
Literature review and hypotheses development
The concept of taxes and tax morale
Taxes are generallyreferred to as compulsory payments made by citizens of a country to the
government either directly from their incomes or through indirect means to assist
governments to make available the essentials for comfortable living. Kirchgässner (2010),
therefore, describes taxes to be the prices for the goods and services provided by the
government. While the provision of such goods and services by the government are meant
for the greater public good, the reality is that most governments especially those in
developing countries struggle to raise enough revenue through taxes to finance them. A
Effect of
personality
traits
273
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