Fairness dimension of goods and services tax

Abstract

A tax system to be called fair must assess the tax liability of each tax-payer without any biases. Most studies suggest a positive relationship between tax fairness perception and compliance behavior. This relation can only be ascertained if the factors of tax fairness are known. This study investigates the dimensions of tax fairness in India concerning the recently implemented Goods and Services Tax (GST). A survey questionnaire on tax fairness was developed and administered to a sample of 210 business people belonging to the micro, small, and medium enterprises (MSME) sector. Measures of central tendency, factor analysis, and reliability analysis identify five robust tax fairness dimensions: General Fairness, Exchange with Government, Process Equity, Inter-Group Equity, and Tax Rate Structure. By identifying the dimensions of tax fairness, the perception of tax-payers can be understood, and the factors leading to tax evasion can be curbed.

The Theoretical Foundations of Voluntary Tax Compliance: Ordinary Logit Regression Model Application

“…Horizontal and vertical equity are the two main elements of tax equity, which is justice, also known as tax equity. While vertical equity suggests that taxpayers who are better off should contribute the same percentage of their income as those who are less well off, horizontal equity supports collecting taxes based on nancial situation (Sahu, 2021). Individuals with different income levels are characterized by vertical equity (Barjoyai, 1987).…”

Theoretical foundations of voluntary tax compliance: evidence from a developing country

“…Horizontal and vertical equities, also known as tax equity, are the two main elements of tax equity. While vertical equity suggests that taxpayers who are better off should contribute the same percentage of their income as those who are less well off, horizontal equity supports collecting taxes based on the financial situation (Sahu, 2021). Individuals with different income levels are characterized by vertical equity (Barjoyai, 1987).…”