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Exploring the Influence of Demographic Characteristics of Malaysian Citizens Towards Tax Evasion

Author

Listed:
  • Nur Quratun ‘Aini Haron*

    (Faculty of Accountancy, Universiti Teknologi MARA, Malaysia)

  • Rina Fadhilah Ismail

    (Faculty of Accountancy, Universiti Teknologi MARA, Malaysia)

  • Nurul Nadiah Ibrahim

    (Faculty of Accountancy, Universiti Teknologi MARA, Malaysia)

  • Siti Aisyah Kamaruzaman

    (Faculty of Accountancy, Universiti Teknologi MARA, Malaysia)

  • Siti Syaqilah Hambali

    (Faculty of Accountancy, Universiti Teknologi MARA, Malaysia)

Abstract

The higher number of tax evasion cases and increase in the statistics of unpaid tax in Malaysia shows that Malaysian citizens still rationalize that the act of tax evasion as tolerable and acceptable. This study examines the linkages between citizens’ of Malaysia attitudes toward tax evasion with their demographic profile. This survey was undertaken in Malaysia, involving a representative sample of 173 of citizens.The scope of this study is limited to the salary earning citizens and retirees only. The salary earning and retirees are chosen as they are the potential taxpayers that may pay tax in future and thus their opinions seem reliable. This study found that Malaysian citizens find it acceptable to evade tax on all sizes of income regardless whether it is “a small part†, “a large part†, or “all part†of their income. From the demographic profile factor, it was found that only age and nature of employment have a significant difference on the attitudes towards tax evasion. On the other hand, the respondents’ gender, level of income and level of education seem to bear no significant difference to their attitudes towards tax evasion. In relation to age, this study found out that older people of above 55 are more opposed to tax evasion compared to citizens in the range of age 25 to 34 and 45 to 54. Such findings are expected as older people tend to become more compliant as they respect the law and the government compared to young people (Ross and McGee, 2011). Secondly, from this study, it appears that retirees are more opposed to tax evasion and there have a two-way tied for the least opposed to tax evasion which is self-employed taxpayers and employers. Retirees might be the ones opposed the most to tax evasion due to their age. Older people tend to respect the authority and law, hence are more averse. Self-employed people might be the ones who are the least opposed to tax evasion that could be due to availability of opportunities to evade tax is larger compared to other groups. In this study, it is also found that employers are the one who are the least oppose to tax evasion. Perhaps, employers earning high income may think that the tax system would reap all their hard work. Besides, employers may perceive that there are too many red tapes that might be a hassle for the employers to comply, thus they tend to evade tax. This study has provided useful insights to facilitate tax authorities in imposing actions and strategies regarding tax evasion.

Suggested Citation

  • Nur Quratun ‘Aini Haron* & Rina Fadhilah Ismail & Nurul Nadiah Ibrahim & Siti Aisyah Kamaruzaman & Siti Syaqilah Hambali, 2018. "Exploring the Influence of Demographic Characteristics of Malaysian Citizens Towards Tax Evasion," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 943-953:5.
    • Handle: RePEc:arp:tjssrr:2018:p:943-953
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    References listed on IDEAS

    as
    1. Robert W. McGee, 2008. "Opinions on Tax Evasion in Asia," Springer Books, in: Robert W. McGee (ed.), Taxation and Public Finance in Transition and Developing Economies, chapter 17, pages 309-320, Springer.
    2. Eriksen, Knut & Fallan, Lars, 1996. "Tax knowledge and attitudes towards taxation; A report on a quasi-experiment," Journal of Economic Psychology, Elsevier, vol. 17(3), pages 387-402, June.
    3. Russo, Francesco Flaviano, 2013. "Tax morale and tax evasion reports," Economics Letters, Elsevier, vol. 121(1), pages 110-114.
    4. Ross Adriana M. & McGee Robert W., 2011. "Attitudes toward Tax Evasion: A Demographic Study of Malaysia," Asian Journal of Law and Economics, De Gruyter, vol. 2(3), pages 1-51, October.
    5. Robert W. McGee (ed.), 2008. "Taxation and Public Finance in Transition and Developing Economies," Springer Books, Springer, number 978-0-387-25712-9, December.
    6. Benno Torgler & Friedrich Schneider, 2005. "Attitudes Towards Paying Taxes in Austria: An Empirical Analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(2), pages 231-250, June.
    7. Ajzen, Icek, 1991. "The theory of planned behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 50(2), pages 179-211, December.
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