Power, justice, and trust: A moderated mediation analysis of tax compliance among Ethiopian business owners

Lemessa Bayissa Gobena and Marius Van Dijke

Journal of Economic Psychology, 2016, vol. 52, issue C, 24-37

Abstract: We explored the moderating roles of legitimate and coercive power held by the tax authority in the relationship between procedural justice, trust in the tax authority, and voluntary tax compliance. Drawing from fairness heuristic theory and the slippery slope framework of tax compliance, we predicted that procedural justice fosters voluntary tax compliance, particularly when legitimate power of the tax authority is low and when coercive power of the authority is high. Moreover, we predicted that these interactive effects are mediated by (cognition-based) trust. Finally, we predicted that coercive power of the tax authority is positively related with enforced tax compliance. The results of a field study among Ethiopian business owners supported most predictions. This research is among the first to integrate social–psychological and deterrence-related factors to understand tax compliance behavior in a developing country.

Keywords: Procedural justice; Trust; Legitimate power; Coercive power; Voluntary tax compliance (search for similar items in EconPapers)
JEL-codes: H26 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:52:y:2016:i:c:p:24-37

DOI: 10.1016/j.joep.2015.11.004

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