Table 1 - uploaded by Nor Raihana Mohd Ali
Content may be subject to copyright.
Attitudes towards the threat of punishment 

Attitudes towards the threat of punishment 

Source publication
Article
Full-text available
Threat of punishment has been emphasized as one of the effective tools to deter taxpayers’ non-compliance attitudes. Thus this study aims to explore the impact of threat of punishment on both individual taxpayers’ attitudes, compliance and non-compliance. The findings from a mixed-modes survey indicate that threat of punishment is insignificant on...

Context in source publication

Context 1
... were mixed attitudes that shaped the respondents' compliance attitudes in terms of the impact of the threat of punishment as shown in Table 1. A large number of respondents appeared to disagree with the third (ToP3) and second (ToP2) items with a percentage of 62 and 40, respectively. ...

Similar publications

Article
Full-text available
Taxes have been the bedrock of revenue generation to any government. The administration of tax is very important to any government as it is the body responsible for implementing and governing the tax laws and other tax related to assessment, collection and remittance of tax. This study is aimed at ascertaining the effect of tax administration on re...
Article
Full-text available
Provides an analysis of the effects of greenspace land taxes on the allocation of land between competing uses over time. Describing development with estimated linear equations permits the dynamic model to be used to quantify the effect of different taxes on the rate of urbanization. Using data from Forsyth County, NC, it is shown that land taxes ca...
Article
Full-text available
A system of taxation has three layers: tax policy, tax laws and tax administration. While taxation has been around for a good number of centuries, the canons of taxation were first presented by Adam Smith in his famous book "The Wealth of Nations" in 1776. These canons of taxation define certain rules and principles upon which a good taxation syste...
Article
Full-text available
Tax awareness is essential part of the tax planning for the individual assesses.Income tax takes away major chunks of hard earning money of an assessee. As every individual assessee who has income more than stipulated limit described by income tax law is liable to pay tax. Therefore, it is important to do tax planning. For better tax planning by in...
Article
Full-text available
Equitable taxation may be the one of much important target for the less developed countries. In those countries' living and working conditions are under certain limits. So tax reforms should include many implementations in which could be provided horizontal equity and encouraging for labour and family. There are many ways to achieve these goals in...

Citations

... The reviewed articles in this sub section are related to economic or structural variables within the developing countries. For instance, Mohdali, Isa, Yusoff and Salwa (2014) discover that punishment is a good determining factor of tax compliance in their empirical study. A conceptual study by Sinnasamy, Bidin and Ismail (2015) conclude that tax rate and tax penalty are determining factors of tax compliance in Malaysia. ...
Article
Full-text available
It is pertinent that sustainable tax compliance is achieved only if the tax policy takes the main determinants of tax compliance into consideration. Meanwhile, tax compliance has been seen as one of the critical tax administration issue particularly amongst the developing countries of the world. In that regards, scholars have contributed immensely in studying the causes or determinants of the phenomenon based on some prevailing factors associated to economic, social and psychological conditions of our society. And the factors are basically linked to some suggested theories. Nevertheless, the study premised on reviewing some related studies conducted amongst the developing countries of the world based on thematic and chronological approach, in order to know the most commonly identified determining factors of tax compliance between the periods of 1998 to 2022. it is imperative to note that the major determining factors extracted from the reviewed literatures are basically ranked from the most commonly identified to the least identified as: taxpayers attitudes and tax fairness perceptions were frequently identified six times each, secondly, tax payers knowledge, perceived behavior and subjective norms were identified four times each, thirdly, sources of income, complexity of tax laws, ethical sensitivity and religiosity knowledge were frequently identified three times, and lastly, perceive tax system and perceived usefulness were frequently identified from the literatures two times each respectively. Therefore, the study concludes that the commonly identified determining factors of tax compliance in the developing countries based on reviewed literature are taxpayer’s attitude and fairness perception. Hence, other empirical studies may need to be conducted to justify the position of this study.
... In fact, it is argued that the excessive use of coercive and punitive measures can rather undermine the legitimacy of public authorities and generate a counterproductive impact on people's commitment to compliance (e.g. Murphy, 2008;Mohdali, 2014). ...
Article
Full-text available
Purpose The policy approach in Pakistan with regard to combating the informal economy has remained quite myopic and skewed in its reliance on measures informed by the rational economic-actor theory as opposed to the social-actor approach. Thus, this study attempts to evaluate and synthesise the two alternative policy approaches and formulate a more theoretically integrative understanding of the subject. Design/methodology/approach The authors gather data from 600 micro-entrepreneurs operating in the retail and wholesale sector of Lahore, Pakistan, which is then analysed using an ordered logit regression technique. Findings In contrast to more developed countries, the finding here is that higher perceived penalties have a highly significant and positive impact on the level of formality of Pakistani micro-entrepreneurs. The perceived risk of detection, meanwhile, has only a moderately significant impact on the micro-entrepreneurs level of formality. Likewise, the level of vertical and horizontal trust has a positive but moderately significant impact on the level of formality. Nonetheless, both the vertical and horizontal trust exhibit a very significant moderating effect on the relationship between the use of penalties and the level of formality, that is, the higher the level of trust that the micro-entrepreneurs have in the state and other businesses, the lower is the effectiveness of punitive measures. Practical implications Deterrence is an effective way to enhance the level of formality in the case of the Pakistani context. Nonetheless, the authors imply that without building trust, this overreliance on punitive and detective measures can actually be counter-productive. A combined and congruent (not sequential) use of voluntary compliance measures is thus warranted. Originality/value It is a unique attempt to evaluate and synthesise the global policy theorisations in a non-mainstream and antagonistic climate, such as Pakistan.
... Individual cognitive appraisal process would influence employees' behavior in an organizational context (Posey 2010). Although several studies argued that employees' cognitive appraisal processes may play an important role in predicting their unethical behavior (Kouchaki and Desai 2015;Mohdali et al. 2014;Posey 2010), how the employee's cognitive appraisal process (e.g., perceived threat process and coping appraisal process) connects the corporate ethics program and unethical behavior is yet to be understood. Only a few studies examined the role of an individual's perceived threat appraisal process in connecting punishment control and unethical behavior in the academic (Akeley Spear and Miller 2012;Waheeduzzaman and Myers 2010) and taxation (Mohdali et al. 2014) context. ...
... Although several studies argued that employees' cognitive appraisal processes may play an important role in predicting their unethical behavior (Kouchaki and Desai 2015;Mohdali et al. 2014;Posey 2010), how the employee's cognitive appraisal process (e.g., perceived threat process and coping appraisal process) connects the corporate ethics program and unethical behavior is yet to be understood. Only a few studies examined the role of an individual's perceived threat appraisal process in connecting punishment control and unethical behavior in the academic (Akeley Spear and Miller 2012;Waheeduzzaman and Myers 2010) and taxation (Mohdali et al. 2014) context. More effort should be put into the role of an employee's perceived threat appraisal process and coping appraisal process in the connection between corporate ethics programs with multiple control elements and unethical behavior in organizations. ...
... To explain the reason behind the failure of the corporate ethics program, some researchers argued that the relationship between the ethics program and unethical behavior might be influenced by other indirect factors (Andreoli and Lefkowitz 2009). According to the protection motivation theory, individual cognitive appraisal process would influence employees' behavior in an organizational context (Kouchaki and Desai 2015;Mohdali et al. 2014;Posey 2010;Rogers 1983). It is reasonable to expect that employee's cognitive appraisal process, including perceived threat process and coping appraisal process, may play an important role in connecting the relationship between corporate ethics program and unethical behaviour (Akeley Spear and Miller 2012; Mohdali et al. 2014;Waheeduzzaman and Myers 2010). ...
Article
Full-text available
While a corporate ethics program is expected to reduce employees’ unethical behavior, understanding the effects of the ethics program elements on reducing the unethical behavior is a crucial issue. This study aims to explore how a corporate ethics program with multiple control elements, including punishment, monitoring, internal reporting, code of ethics, ethics support service and ethics training, influence employees’ threat appraisal process, coping appraisal process and unethical behavior at workplaces. The data to verify proposed research hypotheses were collected by administering questionnaire survey on four autonomous government organizations in Bangladesh. Research findings show that only punishment and monitoring have significantly negative relationships with unethical behavior. Monitoring and internal reporting have significantly positive relationships with threat appraisal. The code of ethics, ethics support service and ethics training are associated positively with coping appraisal. The mediation results reveal that coping appraisal mediates the relationship between ethics program elements and unethical behavior; but the mediation effects of threat appraisal are not significant. This study provides valuable insights into how a corporate ethics program with multiple control elements reduces employees’ unethical behavior as well as how employees’ threat and coping appraisal processes are related to the corporate ethics program and unethical behavior in organizations.
... In contrast with Mohdali et al. (2014), this assertion claimed that sanctions and penalties encourage tax avoidance among taxpayers because of what they believe is a "threat of punishment" from the government. In contrast, the result disagrees with Gemmell et al. (2018), who claimed that tax penalties would not affect taxpayers. ...
Article
Full-text available
Research Aims: The purpose of this study is to determine the underlying reasons behind the man-agement's tax compliance and non-compliance decisions. Design/methodology/approach: This study employed a mixed-method research approach in which the scale observations of taxpayers' tax compliance practices and the taxpayers' lived experiences and perspectives about tax where integrated. The quantitative approach utilized binary logistic regression , and the qualitative approach used thematic and joint-result analyses. Research Findings: The integration of the two research methods revealed three distinct types of taxpayers: impulsive, reflective, and active. The result indicates that the taxpayer's compliance behavior may have an effect on the sustainability of the country's firms, implying that the taxpayer's compliance behavior may manifest in management practices and governance. Theoretical Contribution/Originality: The study's development adds to the body of knowledge of the three types of taxpayers who rationalize their tax compliance and non-compliance. These taxpayers' characteristics are a meta-inference of the effect of tax filing experience and tax morale, and the taxpayers' emerged attitudes substantiated by their perspective on tax. Managerial Implications in the Southeast Asian context: Tax evasion may be a symptom of a larger issue with public finance, law enforcement, organizational architecture, or an organization's ethical standards. A complying owner or management exhibits ethical ideals in their business practices. Taxpayers' ability and willingness to comply with tax regulations will afford management with more opportunities to attract more investors and partners because of ethical and good governance practices. Research limitations and implications:The mixed-method approach elucidates why taxpayers have diverse motivations for tax compliance. This study adds to the literature a new perspective on tax compliance.
... Decisions made by the government should matter to taxpayers since they are the ones who pay the tax. Mohdali et al. (2014) found that taxpayers seeing that the government is competent may contribute to high tax compliance, whereas feeling that the government is not competent, may contribute to low tax compliance. Additionally, taxpayers may avoid or evade paying tax if they find that the government has not provided good service and infrastructure (Machogu, 2015). ...
Article
Full-text available
Tax non-compliance leads to tax evasion and low tax collection, which ultimately may hamper the achievement of Sustainable Development Goals (SDGs). Prior studies suggest that tax compliance is influenced by taxpayers’ attitude, quality of public governance and cost of tax compliance. However, studies that focus on tax compliance among health practitioners are still sparse. Given that potential tax evasion among private health practitioners may lead to a significant loss in government revenue, this study aimed to examine the factors influencing tax compliance among private health practitioners. Data was gathered through a survey involving 271 health practitioners in Malaysia. The findings indicated that only the quality of public governance had a significant relationship with tax compliance while attitude of taxpayers and cost of tax compliance did not significantly influence tax compliance among private health practitioners. This study contributes to the body of knowledge by providing current evidence of tax compliance among health practitioners. By highlighting the importance of educating health practitioners on tax compliance, the study also provides guidance to regulators in planning for more effective tax education and awareness programs. Keywords: tax compliance, attitude of taxpayer, quality of public governance, tax compliance cost, health practitioners
... This study's results support the results of research that have proven that the collaboration of parties involved in the taxation system affects taxpayer compliance (Eichfelder & Kegels, 2014;Lai, Yang, & Chang, 2003;Battiston & Gamba, 2016;Chung & Trivedi, 2003. Alm, Cherry, Jones, & Mckee, 2010Gangl et al., 2013;Vossler & McKee, 2017;Blumenthal, et al, 2001;Feld & Frey, 2007;Castro & Scartascini, 2015;Mohdali, et al, 2014). ...
Article
Full-text available
This study aims to analyze the effect of respectful treatment and institutional image on tax compliance. This study used a survey method of individual non-employee taxpayers at the Primary Tax Office (KPP) in the Regional Office of the DJP I, East Java, totaling 304 respondents. The data were analyzed using Structural Equation Modeling (SEM). The research findings showed that the strength of Crowding Theory and Trust Theory, and that the extrinsic intervention in the form of reward and punishment cannot always increase taxpayer compliance. Instead, a respectful approach and goodwill, ability and integrity of tax authorities in solving tax problems of taxpayers can increase tax compliance. This is supported by the results of the study that: 1) respectful treatment can improve institutional image; 2) respectful treatment can increase tax compliance; 3) institutional image can increase tax compliance. The implication of research results, respectful treatment of tax officers can be used to improve the image of the DJP and taxpayer compliance.
... Some studies find that increasing the risk of detection and/or penalties prevents undeclared work (Blackwell 2010;Kluge and Libman 2017;Mas'ud et al. 2015), with increasing the risk of detection commonly identified as more effective than higher penalties (Alm 1999;Horodnic 2017a, 2017b). However, other studies find that increasing detection and punishments has no effect (Dularif et al. 2019;Hartl et al. 2015;Williams and Franic 2016) and yet others that it results in more undeclared work due to the resultant breakdown of the social contract between citizens and the state (Chang and Lai 2004;Kirchler et al. 2014;Mohdali et al. 2014;Murphy 2005Murphy , 2008. In consequence, to evaluate this rational economic actor approach, the following hypothesis can be tested: ...
Article
When explaining participation in undeclared work, the dominant theorisation views undeclared workers as rational economic actors participating in undeclared work when the benefits exceed the expected costs of being caught and punished. An alternative theorisation views participants’ in the undeclared economy as social actors driven into undeclared work by their lack of vertical trust (in governments) and horizontal trust (in others). To evaluate these perspectives, this paper reports data from 27,565 interviews conducted for a 2019 Eurobarometer survey on undeclared work in 28 European countries. This reveals that raising the expected costs of being caught and punished has no significant impact on the likelihood of conducting undeclared work. However, greater vertical and horizontal trust have a significant impact on preventing participation in undeclared work, and vertical and horizontal trust also moderate the effectiveness of using penalties and detection to deter engagement in undeclared work. The implication for theory is that a social actor perspective is advocated. The result is a call for a policy shift away from the dominant deterrence approach that increases the penalties and risks of detection, and towards a policy approach focused on improving vertical and horizontal trust.
... However, other studies reveal that increasing penalties and the probability of being caught has no effect on participation in the informal sector (Hartl et al., 2015;Williams and Franic, 2016). Other studies reveal that participation in the informal sector grows when deterrents are increased because it results in a breakdown of the social contract between citizens and the state (Chang and Lai, 2004;Hofmann et al., 2017;Kaplanoglou and Rapanos, 2015;Kirchler et al., 2014;Mohdali et al., 2014;Murphy, 2005Murphy, , 2008Murphy and Harris, 2007). Until now, the effects of this deterrence approach, specifically on participation in informal sector entrepreneurship, have not been evaluated. ...
Article
The aim of this paper is to evaluate the effectiveness of two contrasting policy approaches in tackling informal sector entrepreneurship. The dominant deterrence approach theorizes entrepreneurs as rational economic actors who operate in the informal sector when the benefits of doing so outweigh the costs. The resultant policy focus is upon deterring participation by increasing the costs of operating in the informal sector through increased penalties and probability of being caught. Recently, a more preventative approach has emerged theorizing entrepreneurs as social actors operating in the informal sector when there is a lack of vertical trust (in government) and horizontal trust (in others). The consequent policy focus is upon improving entrepreneurs’ vertical trust (in the state) and horizontal trust (in each other). To evaluate these approaches, evidence is reported from a 2019 Eurobarometer survey in six East-Central European countries (Czechia, Estonia, Latvia, Lithuania, Poland and Slovakia). The finding is that participation in informal entrepreneurship is not significantly associated with the deterrent measures of raising the penalties and probability of being caught but is significantly associated with the preventative measures of improving vertical and horizontal trust. The implications for theory and policy are discussed.
... It means that, although the negative relationship between tax evasion and audit intensity is always true whatever audit fashion is applied, the effect of audit memory on tax evasion is uncertain and depends on the agent's degree of risk aversion. This is consistent with the empirical finding in Mohdali et al. (2014). There is a plausible economic explanation for this result. ...
... Our findings in this subsection reveal that the effect of audit memory on tax evasion depends on agent's risk aversion. Therefore, as Mohdali et al. (2014) say, the effect of the threat of punishment on tax evasion varies from group to group, and thus policymakers should consider taxpayers' risk preference when formulating their tax audit strategy. More specifically, policymakers should consider the history of the taxpayer's tax evasion if he is low risk-averse, while they should choose a memoryless tax audit strategy for the taxpayer Fig. 1. ...
Article
In this study, we consider the memory property of tax audits to investigate the tax evasion problem from the perspective of portfolio choice. We explore the implications of the memory property for tax evasion, consumption, and asset allocation. Assuming that tax audits and jumps in the risky asset both follow self-exciting Hawkes processes, we provide a semi-analytical solution to this problem for an agent with constant relative risk aversion (CRRA) utility. We find that the memory feature does not change the agent’s effective holding in the risky asset, and its effects on tax evasion and consumption are determined by the agent’s risk aversion. It is suggested that government should treat agents differentially by their risk preferences and set audit-related parameters carefully to avoid unnecessary public expenditure.
... According to Raihana et al. (2014), the issue of tax compliance becomes one of the main interests and requires special attention by policymakers, tax administrations and societies since non-compliance behaviour may lead to a reduction in tax revenue which indirectly might affect citizens, including those who complies voluntarily. TABLE 1. Number of cases (tax audit settlement) and amount of tax penalties collected Source: IRBM Annual Report, 2011-2015 The amount of tax penalties collected per year indirectly indicates the trend of tax non-compliance in Malaysia (Kasipillai 1999;Natrah 2009;Nor Azrina et al. 2014;Muhammad Aqbal et al. 2016;Nuridayu et al. 2017). ...
... In addition, this study will also examine another two factors, namely treatment provided by tax authority and SVDP, which is also considered an accommodative approach to better understand tax compliance strategies by the IRBM. Many previous studies in Malaysia focus on the tax audit and penalty (deterrence approach) (Razilina et al. 2012;Mohamad et al. 2013;Mohd Rizal et al. 2013;Raihana et al. 2014;Noor Sharoja et al. 2014). Therefore, this study intends to provide a more comprehensive perspective of compliance strategies by extending the study to include the 'other side' or 'positive side' of compliance strategy that is accommodative approach to improve tax compliance. ...
... The threat of punishment has been emphasized as one of the effective tools to curb evasion and has become one of the main strategies used by most tax authorities to overcome non-compliance issue (Verboon & van Dijke 2007;Murphy 2008;Devos 2013;Raihana et al. 2014). It consists of tax audit, tax penalty and tax rate. ...
Article
Full-text available
Due to the significance of tax revenue as the primary source of a country's income, any leakage due to non-compliance behaviour may impact the country, which will eventually affect citizens. One way to reduce tax non-compliance is through compliance strategies which can be categorised into two; deterrence and accommodative approach. It is advisable that tax authority should not only focus on the deterrent approach (tax audit and penalty), mainly on tax offenders. Instead, tax authority also needs to find ways to preserve good taxpayers' continuous fulfilment of their tax responsibilities, encourage future taxpayers to commit to tax laws, and transform tax offenders to become good taxpayers using the accommodative approach. This study uses the survey method to determine individual taxpayers' perception of tax authority's compliance strategies (threat of punishment, tax education programme, treatment provided by tax authority, special voluntary disclosure programme (SVDP)). This study then investigates the influence of those compliance strategies towards tax compliance behaviour. Our findings indicate that individual taxpayers have a positive perception towards compliance strategies provided by the tax authority in Malaysia (refer to Inland Revenue Board of Malaysia (IRBM)). In addition, the threat of punishment, treatment provided by IRBM and SVDP are significantly proven to have a positive relationship with tax compliance. However, it is suggested that IRBM should improve their tax education programmes as it is found to be insignificant. This study contributes to current tax compliance literature in a relatively important field of compliance strategies by providing comprehensive insights into the influence of both deterrence and accommodative apporaches in influencing tax compliance behaviour, as well as focusing more on an accommodative approach that is receiving attention lately. With both approaches in one study, the results of this study provide a clear, complete and comprehensive understanding since most of previous studies conducted separately. Finally, the findings of this study also provide valuable and significant input to the tax authorities and policymakers, especially IRBM in assessing and making a necessary improvement on their compliance strategies with the mission to enhance tax compliance behaviour, especially among individual taxpayers.