DefinePK

Abstract

The research study's aim is to investigate and identify factors influencing tax evasion (Tax system, Tax knowledge, Tax fairness, Tax Morale, and Tax compliance cost).  It also explores the process of paying taxes to the government. Further, the research study indicates the significance of paying taxes timely, making people responsible citizens. On the contrary, it also diagnoses loopholes of tax evasion and the people who enjoy tax evasion and avoid paying taxes. The questionnaire was distributed among people from different professions of various ages, genders, marital status (single, married), occupations, and salary levels to obtain their responses and points of view from major cities of Pakistan, i.e., Karachi, Lahore, and Islamabad approached for surveying regarding the research topic. The result of the study will contribute to the taxpaying people who pay taxes to the government, such as professors, teachers, advocates, doctors, drill miler owners, wheat miller’s owners, ice millers owners, whole sealer shop keepers, medical storekeepers, state agency dealers, and others. For the study, 394 people were chosen using a convenience sampling method, and the questionnaire was analyzed using SPSS Software. Then, this study was studied and interpreted using Smart PLS 3.2.9 version, where the researcher performed a  Partial Least Squares (PLS) analysis, a two-step process. The researchers found the measurement and structural model results of the study. This study found that tax compliance has a positive influence, while tax fairness, tax knowledge, tax morale, and tax system have a negative influence on the perception of taxpayers on tax evasion. Specifically, tax compliance appeared as the primary factor that positively influenced the taxpayers’ perception of tax evasion. Hence, government and other departments should prioritise the efforts to enhance tax compliance compared to other factors. However, other factors, i.e., tax fairness, tax knowledge, tax morale, and tax system, negatively influence taxpayers' perception of tax evasion; these factors also need the attention of the authorities. The study also explained and highlighted factors to increase the tax system and suggested factors to motivate people about the taxpaying system and decrease the ratio of tax evasion in our beautiful country, Pakistan. Pakistan is a developing country, and changing taxpayers' perceptions of tax evasion would benefit the country and, ultimately, boost the economy.




Tax Evasion, Taxpayers' perception, Tax system, Tax Morale, Tax Knowledge, Tax Fairness, Compliance Cost