Question:

Critically examine how tax administration influences taxpayer behaviour in terms of tax compliance. You should frame your argument by relating tax administration to YOUR CHOSEN THREE tax compliance that have been identified in the existing literature: (1) deterrence; (2) personal and social beliefs (norms); (3) sense of trust and fairness.

Country: USA/UK

There is a well-developed body of literature which examines behavioural aspects to taxation. This area is fundamental to the design and effectiveness of tax policy. However, there needs to be a better understanding of how the administration of tax policy influences taxpayer behaviour in terms of attitude, motivation and behaviour towards tax compliance. Developing this area of knowledge would contribute towards improving tax compliance and the efficiency of tax policy and administration. Existing literature suggests that tax compliance is determined by five drivers: (1) deterrence; (2) personal and social beliefs (norms); (3) sense of trust and fairness; (4) complexity; and (5) perception of government and the economic climate. This assignment asks you to explain, evaluate and compare THREE out of the five drivers and provide real examples (relating to any country) to each driver as part of your review. You should provide a critical argument drawing from relevant literature and material from this module and other sources