Wealthy Tax Non-Filers in a Developing Country: Taxpayer Knowledge, Perceived Corruption and Service Orientation in Pakistan

27 Pages Posted: 15 Aug 2015

See all articles by Katharina Gangl

Katharina Gangl

University of Goettingen (Gottingen); Zeppelin University

Erich Kirchler

University of Vienna - Faculty of Psychology

Christian Lorenz

University of Applied Sciences and Technology Aachen (RWTH Aachen); University of Muenster

Benno Torgler

Queensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: August 13, 2015

Abstract

Although tax non-filing and the resulting tax evasion are a challenge to public welfare, particularly in developing countries, scholarly knowledge on taxable citizens who do not register as taxpayers, also known as the ‘ghosts’, is minimal. To expand this knowledge base, this empirical paper compares rich self-employed individuals identified as non-filers with a randomized group of tax filers with similar socio-demographic backgrounds in terms of two bases of perceived tax system legitimacy: knowledge of taxpayers’ rights and perceived corruption in the tax administration. The results indicate not only that that both of these factors are related to tax non-filing but that a perceived service orientation of the tax administration is related to increased tax knowledge and lower perceptions of corruption. These findings imply that services which reduce citizens’ ignorance of their tax rights and reduce doubts about authorities’ correct behaviour might foster perceived legitimacy of the tax system and in turn increase willingness to pay taxes in developing countries.

Keywords: Wealthy tax non-filers, tax morale, tax compliance, tax knowledge, knowledge of rights, corruption, tax evasion, developing countries, Pakistan

JEL Classification: H26, O17, E26, H70, I30

Suggested Citation

Gangl, Katharina and Kirchler, Erich and Lorenz, Christian and Torgler, Benno, Wealthy Tax Non-Filers in a Developing Country: Taxpayer Knowledge, Perceived Corruption and Service Orientation in Pakistan (August 13, 2015). Available at SSRN: https://ssrn.com/abstract=2643456 or http://dx.doi.org/10.2139/ssrn.2643456

Katharina Gangl (Contact Author)

University of Goettingen (Gottingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Zeppelin University ( email )

Am Seemooser Horn 20
Friedrichshafen, Lake Constance 88045
Germany

Erich Kirchler

University of Vienna - Faculty of Psychology ( email )

Universitaetsstrasse 7
Vienna, A-1010
Austria
+43 1 42 7747332 (Phone)
+43 1 42 7747339 (Fax)

HOME PAGE: http://homepage.univie.ac.at/erich.kirchler

Christian Lorenz

University of Applied Sciences and Technology Aachen (RWTH Aachen) ( email )

Aachen
Germany

University of Muenster

Universitätsstr. 14-16
48143 Munster
Germany

Benno Torgler

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

CREMA

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
178
Abstract Views
663
rank
170,348
PlumX Metrics