This paper examines the assumptions of the Slippery Slope Framework using cross-country data; an area which has been neglected since the emergence of the framework in 2008. Several studies in this area have tested the assumption of the framework using primary data collected through survey with students or real taxpayers as subjects. Hence, this study tests these assumptions using statistical data generated from an institutional database. The empirical result from our sample indicates that trust in and power of authorities strongly interacts in explaining tax compliance.
Slippery Slope Framework has attracted exceptional attention from researchers in economic psychology and taxation field through validation by renowned scholars via variety of surveys and experimental designs. However, application of cross-sectional analysis in validating the framework has been scant, the available studies being focused on a single continent only. This study aims to test the assumptions of "Slippery Slope Framework" through examination of the influence of trust in authorities and power of authorities on tax compliance globally. The sample of 158 countries was selected as of 2016. Data was analyzed through Ordinary Least Squares Regression Analysis. The results reveal that trust in authorities significantly influences tax compliance, but power of authorities does not. Additionally, the interaction effect of trust and power on tax compliance has not been established through this crosscountry analysis. Practically, the results suggest that authorities should ensure judicious use of taxpayer monies in the provision of public goods and services, and also fairness and equity among taxpayers. Eventually, these will enhance trust and improve tax compliance. Theoretically, the study calls for disaggregation analyses where each continent will be studied individually for replication of these findings and establishing the interaction effect wherever possible.
Contribution/Originality: This study contributes to the literature by examining the determinants of MNCs tax avoidance strategies by looking at their effective tax rates (ETRs). Previous studies indicated that MNCs have greater chances to avoid taxes on the cross-border investments as compared to strictly domestic investments and thus, resulting in the differences between the effective tax rates (ETRs) of the MNCs and domestic-only companies (Abdul and Derashid, 2006; Markle and Shackelford, 2012). Furthermore, the reports on the tax avoidance activities by the MNCs such as Google, Apple, Starbuck Coffee, eBay and other highly reputable MNCs have triggered intense public discussions at the international level. Those MNCs are reported to drastically reduce their tax burden on worldwide income by engaging tax avoidance method
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