International Journal of Public Administration
ISSN: 0190-0692 (Print) 1532-4265 (Online) Journal homepage: https://www.tandfonline.com/loi/lpad20
What Factors Influence the Intentions of
Individuals to Engage in Tax Evasion? Evidence
from Ghana
Godfred Matthew Yaw Owusu, Rita Amoah Bekoe, Fred Kwasi Anokye &
Lydia Anyetei
To cite this article: Godfred Matthew Yaw Owusu, Rita Amoah Bekoe, Fred Kwasi Anokye
& Lydia Anyetei (2019): What Factors Influence the Intentions of Individuals to Engage in
Tax Evasion? Evidence from Ghana, International Journal of Public Administration, DOI:
10.1080/01900692.2019.1665686
To link to this article:  https://doi.org/10.1080/01900692.2019.1665686
Published online: 19 Sep 2019.
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INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION
https://doi.org/10.1080/01900692.2019.1665686
What Factors Influence the Intentions of Individuals to Engage in Tax Evasion?
Evidence from Ghana
Godfred Matthew Yaw Owusu, Rita Amoah Bekoe, Fred Kwasi Anokye, and Lydia Anyetei
Accounting, University of Ghana Business School, Accra, Ghana
ABSTRACT KEYWORDS
This study examines the views of students on the ethics of tax evasion, their intentions to evade Tax evasion; theory of
tax, and investigates the factors that predict such intentions. Relying on the extended version of planned behaviour; ethics of
the Theory of Planned Behaviour, the study investigated whether attitudes, subjective norms, tax evasion; structural
perceived behavioural control, and moral obligation may be good predictors of the intention to equation modelling
evade tax. Data were gathered from 662 students of University of Ghana Business School using
questionnaires. The hypotheses were tested using the structural equation modelling technique.
Results indicate that the intention to evade tax among the students is low and most respondents
generally perceive tax evasion as an unethical practice. The results also demonstrate that attitude,
subjective norms and moral obligations have important implications on the intention to evade
tax. The evidence we provide should be useful to governments and tax agencies interested in
promoting responsible tax compliance behaviour among individual taxpayers.
Introduction
Bretton Wood institutions including the World Bank
One major challenge that governments across the globe and International Monetary Fund (IMF) to support
have been confronted with for decades is the inability to their budgets. Reliance on these external sources of
meet their annual tax revenue targets. Being one of the funding, however, have not been without problems.
most important and reliable sources of revenue to every While donor support which traditionally provided finan-
government, the gap in tax revenue—which is the absolute cing for a large share of public investment in developing
value of non-received tax revenue in a fiscal year—remains countries has been dwindling for years (Asiedu, 2006;
one of the critical challenges of most economies (Choo, Hernández-Catá, 2000, p. 7), dependence on IMF and
Fonseca, & Myles, 2016). A major source of this problem World Bank support has also been criticized for its
has been attributed to the widespread evasion of tax by unfair conditionalities and negative consequences. For
both individuals and corporations. Defined as the use of instance, the World Bank and IMF funding programmes
illegal means to pay less taxes or no taxes at all (Slemrod & have been criticized for widening income inequalities
Weber, 2012), tax evasion has become a very topical issue (Forster, Kentikelenis, Reinsberg, Stubbs, & King,
in contemporary times due to its debilitating effect on the 2019), affecting public health-care delivery negatively
capacity of many countries to raise sufficient revenue to because of restricted government spending on social
finance public expenditure. Notwithstanding the efforts by services (Benton & Dionne, 2015), infringing on labour
most governments especially in enacting laws that seek to rights (Blanton, Blanton, & Peksen, 2015) etc. These
punish tax offenders as a deterrent measure (Casagrande, problems have brought to the fore the need for develop-
Di Cagno, Pandimiglio, & Spallone, 2015), such efforts ing countries to reduce their over-dependence on exter-
unfortunately have not yielded the desired outcome of nal funding sources and rather concentrate on financing
convincing every citizen to fully fulfill their tax obligations their developmental agenda using domestic tax revenues.
to the state (McGee, Ho, & Li, 2008; Pui Yee, Moorthy, & Like most developing countries, Ghana has had its
Choo Keng, 2017). fair share of difficulties in her quest to maximize domes-
Consequently, governments especially from develop- tic revenue mobilization through taxes. Notwithstanding
ing countries, have over years depended so much on the fact that taxes constitute the largest proportion of
foreign assistance and on the continuous support of total revenue to the state, accounting for approximately
CONTACT Godfred Matthew Yaw Owusu gmowusu@gmail.com Accounting, University of Ghana Business School, Accra, Ghana.
Color versions of one or more of the figures in the article can be found online at www.tandfonline.com/lpad.
© 2019 Taylor & Francis Group, LLC
2 G. M. Y. OWUSU ET AL.
75% of total revenue within the last four years (Ministry attracts severe punitive measures such as criminal prosecu-
of Finance fiscal data, 2015–2018), the country continues tion if the act is uncovered. As a result of such punitive
to miss its revenue targets on an annual basis due to measures, perpetrators consciously hide such illegal beha-
widespread evasion of taxes. In part, this has been attrib- viour (Houston & Tran, 2001).
uted to the structure of the Ghanaian economy which is Various reasons have been adduced to explain why
characterized by a large informal sector described in people evade taxes. For instance, a huge tax burden,
many circles as the ‘difficult to tax group’. About 86% dishonesty, and corruption have been cited as reasons
of Ghanaians are estimated to be working in the infor- for tax evasion (Torgler, 2005). Also, McGee (1999)
mal sector (Ghana Statistical Service, 2012) most of reports inadequate tax collection mechanisms and peo-
whom are not registered with the relevant bodies for ples’ belief that they have no tax payment responsibility
taxation purposes (Adu & Amponsah, 2017; Amponsah, towards government since government does nothing
Isshaq, & Agyapong, 2019). for them as reasons for tax evasion. Other reasons
While not discounting the contribution of the informal including unfair treatment by tax authorities, lack of
sector to the tax evasion menace, individual tax evasion trust in tax officials and poor customer service have
decision is believed to be influenced by a multiplicity of been cited in some studies (Alm & Martinez-Vazquez,
factors (Ali & Ahmad, 2014; Machogu & Amayi, 2016). 2007; Tanzi & Zee, 2000; Torgler, 2005). It has also
An understanding of these factors is therefore critical to been argued that the existence of an opportunity to
developing appropriate strategies to promote responsible evade taxes can also influence tax evasion behaviour
tax behaviour among citizens so as to help reduce the (Forest & Kirchler, 2010; Hashimzade, Myles, Page, &
occurrence of tax evasion. Relying on the extended ver- Rablen, 2014) while social norms and the ethical orien-
sion of the Theory of Planned Behaviour (TPB) as pre- tation of individuals have also been associated with tax
viously used by Alleyne and Harris (2017), the current evasion (Bazart & Bonein, 2014; Pickhardt & Prinz,
study investigates the intention of people to engage in tax 2014). Thus, a multiplicity of factors can be responsible
evasion and the key predictors of such intentions. Unlike for the tax payment compliance or noncompliance
the empirical work of Alleyne and Harris (2017), how- behaviour of people.
ever, this study additionally investigates the ethical per- Researching into actual unethical behaviours can be
ception of individuals on tax evasion and ascertains the daunting in reality for reasons such as difficulties in
influence of this perception on the intention to engage in locating the actual wrongdoers, difficulty in gaining
tax evasion. We contribute to the tax evasion literature by access to information and even where access is granted,
highlighting the dominant factors that predict the inten- information may be censored (Alleyne, 2016; Alleyne,
tion of people to engage in tax evasion applying the Hudaib, & Pike, 2013; Chiu, 2003). Consequently,
extended version of the TPB framework in a developing researchers have resorted to using intentions to engage
country setting. in an unethical behaviour as a useful proxy for actual
unethical behaviour (Alleyne & Harris, 2017; Alleyne,
Hudaib, & Haniffa, 2015).
Literature review
The concept of tax evasion Intentions to engage in tax evasion
Tax evasion is a phenomenon that poses a serious threat to The motivational factors that influence an individual’s
society. It denies a country substantial amounts of money behaviour are captured within the individual’s intentions.
that would otherwise have been available to undertake Intentions give an indication of people’s determination
developmental activities such as provision of healthcare, and willingness to pursue a behaviour as well as the
education, infrastructure and other social services amount of planned effort to be exerted to perform the
(Korndörfer, Krumpal, & Schmukle, 2014). Alleyne and behaviour (Ajzen, 1991). Ajzen (1991) posits that an
Harris (2017) assert that it has become an albatross around individual’s intention to perform a particular behaviour
the neck of governments worldwide due to perpetrators’ is influenced by attitude towards the behaviour (the
adoption of innovative and changing schemes making its degree to which an individual has a favourable or unfa-
regulation quite difficult. Korndörfer, Krumpal & vourable evaluation of the behaviour), subjective norm
Schmukle (2014, p. 19) define tax evasion as “an illegal act (the perceived social pressure from significant others to
that violates the law and deviates from social norms that either perform or not to perform a behaviour) and per-
prescribe that taxes should be paid”. The definition brings ceived behavioural control (the perceived ease or diffi-
to bear the issue of illegality and an unethical practice once culty in the performance of a behaviour). Prior studies
an individual engages in it. It is thus, a phenomenon that have used these constructs to predict an individual’s
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 3
intention to engage in a tax behaviour (Alleyne & Harris, trust in authorities (Torgler, 2005), perceived fairness
2017; Bobek, Hatfield, & Wentzel, 2007). of the tax system (Zainan, Noor, Omar, Aziz, & Sanusi,
2017) and taxpayers’ expectation of positive potential
for gains (Baldry, 1987). Empirically, some studies have
The theoretical framework: extended version of the
found a link between taxpayers’ attitudes and tax com-
theory of planned behaviour
pliance behaviour of taxpayers (Abdul–Razak &
The Theory of Planned Behaviour (TPB) is an exten- Adafula, 2013; Alabede, Ariffin, & Idris, 2011). Other
sion of the Theory of Reasoned Action (TRA) predo- studies have also found attitude to be associated with
minantly used to explain and predict human behaviour. tax evasion (Kirchler, Hoelzl, & Wahl, 2008; Trivedi,
The TPB posits that attitude, subjective norm and per- Shehata, & Mestelman, 2004). Similarly, Alleyne and
ceived behavioural control are the factors that influence Harris (2017) found attitudes towards a behaviour to
the behavioural intentions of individuals with the beha- be a significant predictor of an individual’s intention to
vioural intentions influencing the performance of engage in tax evasion.
actual behaviour (Ajzen, 1991). The key argument by these studies is that individuals
Ajzen (1991) explains that attitude is the extent to who are more likely to engage in tax evasion are those
which an individual assesses a behaviour to be favour- who have favourable attitudes towards tax evasion. On
able or unfavourable. Subjective norm describes the the other hand, individuals who have unfavourable
perceptions that an individual has on the opinions of attitudes towards tax evasion are less likely to engage
other important people whose views can influence the in tax evasion. Based on the above, we hypothesize that:
decisions of the decision maker. Perceived behavioural
control on the other hand describes the degree of con- H1: An individual’s attitude towards tax evasion is
trol that an individual has about his/her own ability to positively related to intention to engage in tax evasion.
engage in a particular behaviour. From the tenets of the
TPB, the attitude of an individual towards a behaviour,
the influence of other prominent community members
Subjective norm and intentions to engage in tax
on the behaviour of an individual and the perception of
evasion
an individual’s ability to perform the behaviour influ-
ence the performance of the actual behaviour. Subjective norm indicates the influence that the opi-
Beck and Ajzen (1991) later extended the TPB frame- nions of other important people in an individual’s life
work with an additional variable ‘moral obligation’ which have on the decisions made by that individual. Beck
captures the perception that an individual has about the and Ajzen (1991) argue that the decision-making pro-
moral uprightness or otherwise of engaging in a certain cess of an individual can be influenced greatly by the
behaviour. Due to its comprehensive nature in explaining opinions of other important people in one’s life such as
and predicting the behaviour of individuals, this study family members, friends, co-workers and peers. The
draws on the extended version of the TPB to examine the perceived endorsement or otherwise that an important
factors that influence the intentions of individuals to person will give to a particular behaviour will influence
engage in tax evasion. The study specifically investigates an individual to either conform or not to conform.
whether students’ attitude towards tax evasion (attitude), The perceived support or otherwise given by signifi-
their perception of tax evasion approval by prominent cant others on a particular behaviour can influence an
stakeholders (subjective norm), the perception of their individual’s intention to engage in that behaviour
capacity to engage in tax evasion (perceived behavioural (Fishbein & Ajzen, 1975). For instance, the opinion of
control), and their perception of the moral correctness or significant others is reported to be the most important
otherwise of engaging in tax evasion (moral obligation) are factor that influences individuals to comply with taxes
significant predictors of intentions to engage in tax evasion. (Scholz, McGraw, & Steenbergen, 1992). Jimenez and
Iyer (2016) note that tax compliance intentions are influ-
enced by social norms which in turn increases the perso-
Attitude and intentions to engage in tax evasion
nal norms of individual tax compliance. Kirchler et al.
Attitude towards a particular behaviour describes the (2008) also assert that taxpayers are more likely to be
degree to which an individual either favourably or non-compliant if they believe that tax non-compliance is
unfavourably evaluates the behaviour (Ajzen, 1991). quite widespread in the society and significant others do
The attitude of an individual towards tax will have an not frown on it. Also, Hasan, Mohammad, and Alam
effect on compliance. Extant literature has documented (2017) report that subjective norm influences signifi-
some tax attitudes to include taxpayers’ perception of cantly the tax compliance behaviour of taxpayers.
4 G. M. Y. OWUSU ET AL.
Specifically, on tax evasion, extant literature has to the moral obligation to either perform or not to
found a relationship between subjective norm and perform a particular behaviour. Beck and Ajzen
intentions to engage in tax evasion (Alleyne & Harris, (1991) thus, added moral obligation as an antecedent
2017; Bobek et al., 2007; Richardson, 2006; Tsakumis, which is influential in increasing the predictive power
Curatola, & Porcano, 2007). Generally, individuals are of the theory of planned behaviour.
less likely to engage in tax evasion if they perceive that Shaw, Shiu & Clarke (2000, p. 882) define moral
significant others do not approve of that behaviour and obligation as “an individual’s internalized ethical rules,
vice versa. Therefore, the study hypothesizes that: which reflect their personal beliefs about right and
wrong”. It is basically about how personally responsible
H2: An individual’s subjective norms are positively an individual feels towards others. Bobek and Hatfield
related to intention to engage in tax evasion. (2003) note that individuals who personally have
a sense of responsibility towards others will respond
to ethical issues in a different manner from those who
do not have any sense of responsibility towards others.
Perceived behavioural control and intentions to
Some studies have found moral obligation to signifi-
engage in tax evasion
cantly influence an individual’s intention to engage in
Perceived behavioural control which is the perceived ease certain behaviours (Beck & Ajzen, 1991; Cronan & Al-
or difficulty of engaging in a particular behaviour influ- Rafee, 2008; Yoon, 2011). Tax compliance behaviours
ences the intention to perform that behaviour (Ajzen, 1991; have been found to be influenced by moral obligations
Beck & Ajzen, 1991). The perceived ease or difficulty is (Bobek & Hatfield, 2003; Riahi-Belkaoui, 2004). With
reflected in the belief that the individual has with respect to respect to tax evasion, Reckers, Sanders, and Roark
the availability of resources and opportunities as well as the (1994) findmoral obligation to be a predictor of tax evasion
obstacles and hindrances in engaging in a behaviour. intentions. Torgler (2003) also finds that individuals who
Basically, where perceived behavioural control is quite view tax evasion as immoral are more likely to comply.
high (more resources and opportunities), it is more likely Also, Culiberg (2018) finds support for moral obligation
an individual will have greater intentions to engage in tax influencing an individual’s intention to engage in tax eva-
evasion. For instance, extant literature documents that tax sion. Again, Alleyne andHarris (2017) find that individuals
non-compliance and tax evasion become quite prevalent in with high moral obligation are less likely to engage in tax
the presence of an opportunity (Antonides & Robben, evasion. Based on these, we hypothesize that:
1995; Carnes & Englebrecht, 1995). On the other hand,
where perceived behavioural control is very low (more H4: An individual’s level of moral obligation is nega-
difficulties and hindrances), it is less likely an individual tively related to intention to engage in tax evasion.
will have greater intentions to engage in tax evasion. As
surmised by Carnes and Englebrecht (1995) an important
factor that influences the tax compliance decisions of an
Ethics of tax evasion
individual is the perception of detection risk. Alleyne and
Harris (2017) conclude that individuals with low perceived The concept of ethics can be explained as the normative
behavioural control have less motivation to engage in tax systems of rules of conduct that guides the social interac-
evasion. As a result, this study hypothesizes that: tions and interpersonal relationships of individuals (Hogan,
1973). Ethics defines the right or wrong conduct of an
H3: An individual’s level of perceived behavioural con- individual in a particular situation. Surbhi (2015) asserts
trol is positively related to intention to engage in tax that ethics functions as a guiding principle that helps to
evasion. determine what it good or bad. Arens, Elder, and Mark
(2012) see it as something that helps society to function
orderly. On the ethics of tax evasion, McGee (2006b) pre-
sents three views that exist in extant literature.
Moral obligation and intentions to engage in tax
The first view which is described as the absolutist view
evasion
states that tax evasion is always or almost always unethi-
Molero and Pujol (2012) assert that it is quite difficult cal. Three basic reasons underpin this view of tax evasion.
to understand the behaviour of humans without con- The first reason is that individuals must submit to an
sidering ethical factors. Ajzen (1991) notes that in deal- authority and that they owe a duty to God to pay taxes
ing with ethically sensitive situation, consideration or it is a command from God to pay taxes. Proponents of
needs to be given to how an individual feel with regards this view normally use the Holy Bible by quoting Mathew
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 5
22:17–21 and Romans 13:1–2 to buttress their point. from Alleyne and Harris (2017). All the indicators of the
The second reason is that for a state to function properly, study constructs were measured on Likert scale with
individuals have a duty to pay taxes. That last reason is anchors ranging from one to seven, details of which are
that individuals have an ethical duty to contribute to the provided in Table 2.
welfare of other people of the community by paying taxes.
The second view which is described as the anarchist
view states that tax evasion is never or almost never Participants and data collection
unethical. The proponents of this view assert that indivi- The questionnaires were self-administered to the targeted
duals do not owe any duty to pay taxes to any government students from the University of Ghana Business School
because all governments are illegitimate and unworthy to (UGBS) after explaining to them the purpose of the study.
receive tax payments. They further describe government To get honest responses and minimize the possibility of
as a thief which confiscates assets and percentages of getting socially desirable answers, the respondents were
paychecks without the consent of the owners of the prop- made aware that participation in the survey was voluntary
erty (McGee, 2006b; McGee & Guo, 2007). and they were assured that their responses will be kept
The third view holds the assertion that tax evasion is confidential and solely used for this study. Out of the 750
ethical in some circumstances but unethical other circum- questionnaires distributed 667 were returned represent-
stances (McGee & Guo, 2007). Normally, individuals who ing a response rate of 88.93% and 662 were deemed usable
subscribe to this view often have reason (s) to buttress their as five questionnaires were not filled fully by the respon-
stance on tax evasion, whether it is ethical or unethical. dents and therefore, were excluded from the analysis.
These reasons could emanate from their religious and
moral inclinations. This view towards tax evasion is the
most prevalent view. We thus hypothesize that: Profile of respondents
Table 1 presents the descriptive statistics of the respondents.
H5: An individual’s ethical perception when taxes are The sample was dominated by males and Christians with
being used for good purposes is negatively related to a proportion of 55.6% and 95.6%, respectively. Most of the
intention to engage in tax evasion. respondents fall between the ages of 20–25 years (62.1%),
an indication of the respondents belonging to the youthful
H6: An individual’s ethical perception when taxes are population. In addition, majority of the respondents
being used for bad purposes is positively related to (62.7%) are low-income earners with a monthly income
intention to engage in tax evasion. of GHS500 or less. Students in the undergraduate level
dominated the sample with a proportion of 65.86%. More
of the respondents were offering Accounting (44.3%) as
Methodology
Table 1. Demographic characteristics of respondents.
Research design and instrument development Variables Frequency Percent
AGE
The study used the survey method of research with ques- 16–19 years 163 24.6
tionnaires as the means of data collection. The question- 20 – 25 years 411 62.1
26 – 30 years 46 6.90
naires consisted of three different sections. The first section 31 years and above 42 6.30
requested the background information about the respon- GENDERMale 368 55.6
dents including age, gender, course major, level of study, Female 294 44.4
religion and monthly income. The second section sought COURSE MAJORAccounting 293 44.3
respondents’ views on the ethics of tax evasion. The respon- BSc administration 234 35.3
dents were asked to indicate their response category on the Finance & Insurance 49 7.40Health service & Public Administration 34 5.20
ethics of tax evasion instrument developed by McGee et al. Human resource 37 5.60
Marketing 15 2.30
(2008). The third section focused on the specific questions LEVEL
used to measure respondents’ intentions to evade tax and Undergraduate 436 65.86
Postgraduate 226 34.14
the factors that influence their intentions. Using the theo- RELIGION
retical lens of the extended version of the TPB, four con- Christianity 633 95.6
Islam 29 4.40
structs: Attitude, Subjective Norm, Perceived Behavioural MONTHLY INCOME
Control andMoral Obligation are considered to be impor- GHS 100–500 415 62.7
GHS 501–1000 100 15.1
tant predictors of intention to engage in tax evasion. The GHS 1001–1500 36 5.40
indicators used to measure these constructs were adapted GHS 1501 and above 111 16.8
6 G. M. Y. OWUSU ET AL.
Table 2. Descriptive statistics on constructs.
Variables Mean Std. Deviation
ATTITUDE TOWARDS TAX EVASION
Overall Mean 5.16
Tax evasion is bad 5.45 2.146
It is unwise to engage in tax evasion 5.31 2.044
Tax evasion can be useless 4.71 2.063
I find the concept of tax evasion to be unattractive 4.94 2.028
Cheating on taxes is unpleasant 5.41 1.991
SUBJECTIVE NORMS
Overall Mean 5.38
Most people I know would not approve of me cheating on taxes 5.49 1.874
If I cheated on my taxes, most people who are important to me would disapprove 5.42 1.821
Those who are important to me do not think it is okay to cheat on taxes 5.37 1.867
It is likely that most people who are important to me will look down on me if I cheat on 5.22 1.929
taxes
PERCEIVED BEHAVIOURAL CONTROL
Overall Mean 4.54
It will be difficult for me to cheat on taxes 5.43 1.855
I would engage in tax evasion only if I have a good reason to do so. 4.32 2.202
If I want to, I can cheat on taxes 3.87 2.260
MORAL OBLIGATION
Overall Mean 2.94
I think it would be morally right to engage in tax evasion 3.15 2.289
I would not feel guilty if I cheated on taxes 2.90 2.076
Cheating on taxes does not go against my principles 2.71 1.990
It would not be morally wrong for me to cheat on taxes 2.98 2.184
INTENTIONS TO ENGAGE IN TAX EVASION
Overall Mean 5.23
Even if I had the opportunity, I would never cheat on taxes 5.34 1.905
I would never cheat on taxes 5.20 1.956
I may not cheat on taxes in the future 5.14 1.977
THE VIEWS OF STUDENTS ON THE ETHICS OF TAX EVASION
Overall Mean 3.02
Tax evasion is ethical if tax rates are too high. 3.19 2.128
Tax evasion is ethical even if tax rates are not too high because the government is not 2.91 2.013
entitled to take as much as it is taking from me.
Tax evasion is ethical if the tax system is unfair. 3.48 2.184
Tax evasion is ethical if a large portion of the money collected is wasted 3.56 2.213
Tax evasion is ethical even if most of the money collected is spent wisely. 2.80 2.093
Tax evasion is ethical if a large portion of the money collected is spent on projects that 3.05 1.965
I morally disapprove of.
Tax evasion is ethical if a large portion of the money collected is spent on worthy projects. 3.00 2.143
Tax evasion is ethical if a large portion of the money collected is spent on projects that 2.72 1.914
benefit me.
Tax evasion is ethical if a large portion of the money collected is spent on projects that do 2.89 2.088
not benefit me.
Tax evasion is ethical if everyone is doing it. 2.61 2.033
Tax evasion is ethical if a significant portion of the money collected winds up in the 3.50 2.287
pockets of corrupt politicians or their families and friends.
Tax evasion is ethical if the probability of getting caught is low. 2.62 1.906
Tax evasion is ethical if some of the proceeds go to support a war that I consider to be 3.12 2.077
unjust.
Tax evasion is ethical if I cannot afford to pay. 3.20 2.048
Tax evasion is ethical even if it means that I pay less and others will have to pay more 2.66 1.875
a course major and this was distantly followed by students predicted hypotheses of the study were tested using the
who were yet to choose their course major (35.3%). The structural equation modelling (SEM). SEM-based techni-
remaining students major in other subject areas such as ques help researchers to test and validate relationships as
finance, health services management, human resource, well as evaluate measurement models and structural paths
insurance, marketing and public administration. that comprise latent constructs made up of multiple indi-
cator variables (Astrachan, Patel, & Wanzenried, 2014).
The Covariance-based SEM (CB-SEM) technique was
Data analysis procedures and results adopted using version 21 of the Analysis of Moment
Data for the study were initially analyzed descriptively Structures (AMOS) software.
showing the extent to which the respondents agreed or
disagreed with the various statements used in measuring
Descriptive statistics on constructs
each of the constructs. The construct ‘ethics of tax evasion’
was subsequently subjected to an Exploratory Factor This section reports the mean scores and standard
Analysis (EFA) to examine its dimensionality. The deviations of the respondents’ views on the specific
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 7
indicators used to measure the key constructs of the Table 3. Rotated component matrix.
study. The mean score of each indicator under the Ethics of Tax Evasion Good Bad
respective construct indicates the extent of agreement Tax evasion is ethical if a large portion of the money .829
collected is spent on projects that benefit me.
or disagreement by the respondents to each statement. Tax evasion is ethical if a large portion of the money .828
Results of this analysis as presented in Table 2 show an collected is spent on worthy projects.
Tax evasion is ethical even if most of the money .822
overall mean of 5.16 for the construct ‘attitude towards collected is spent wisely.
tax evasion’. This value suggests that the respondents Tax evasion is ethical if everyone is doing it. .723
Tax evasion is ethical even if tax rates are not too .646
agreed strongly with the statements that described tax high because the government is not entitled to
evasion to be bad, unpleasant and unattractive. This take as much as it is taking from me.
finding thus, suggests that the sampled students have Tax evasion is ethical if a large portion of the money .631collected is spent on projects that do not benefit
an unfavourable attitude towards tax evasion. The con- me.
struct ‘subjective norm’ recorded an overall mean of Tax evasion is ethical even if it means that I pay less .580and others will have to pay more
5.38 (the highest among the constructs) which demon- Tax evasion is ethical if the probability of getting .527
strates that the respondents were strongly of the view caught is low.Tax evasion is ethical if a large portion of the money .839
that other important people in their lives will disap- collected is wasted
prove of them cheating on their tax responsibilities. Tax evasion is ethical if the tax system is unfair. .818Tax evasion is ethical if a significant portion of the .766
Perceived behavioural control on the other hand had money collected winds up in the pockets of
an overall mean of 4.54 which shows the uncertainty of corrupt politicians or their families and friends.Tax evasion is ethical if tax rates are too high. .640
the degree of control that the students have over their Tax evasion is ethical if I cannot afford to pay. .630
intention to engage in tax evasion. The construct ‘moral Tax evasion is ethical if some of the proceeds go to .611support a war that I consider to be unjust.
obligation’ had overall mean was 2.94 an indication that Tax evasion is ethical if a large portion of the money .511
the respondents generally consider tax evasion to be collected is spent on projects that I morally
disapprove of.
morally wrong. The variable of interest ‘intention to Eigenvalues 6.243 2.241
engage in tax evasion’ also recorded an overall mean of Percentage of Variance Explained 41.621 14.942
5.23 suggesting that the respondents had a very low
intention to engage in tax evasion.
Lastly, in terms of the views of students on the ethics of df = 105, p-value <0.01). Principal components analysis
tax evasion, an overall mean score of 3.02 was recorded revealed the presence of two factors with eigenvalues
which presupposes that generally most of the students exceeding 1.0 explaining a total of 56.6% of the variance.
view tax evasion as an unethical practice regardless of The first factor which we referred to as ‘Good’ consists
the motive. The mean scores for almost all the indicators of indicators that measure the ethical stance of students
were below the mid-point value of 3.5 an indication that on tax evasion when tax revenues are perceived to be used
tax evasion is seen as unethical in all circumstances by the for good purposes by the state. Factor two referred to as
respondents. Impliedly, the respondents appear to sub- ‘Bad’ contained indicators describing tax evasion as ethi-
scribe to the absolutist view which argues that tax evasion cal when tax revenues are believed to be spent unwisely.
is always or almost always unethical because no state can
function properly without taxes and the believe that indi-
Confirmatory factor analysis (CFA), reliability
viduals have an ethical duty to contribute to the welfare of
and validity tests
other people by paying taxes. This notwithstanding,
majority of the respondents somehow agree to the state- We initially subjected all the constructs to a CFA proce-
ment that tax evasion is ethical if a large portion of the dure to determine the appropriateness of the indicators
money collected ends up being wasted (mean = 3.56). of the various constructs for inclusion in the structural
model analysis. Consequently, all the constructs were
considered as exogenous at this stage and linked by
Exploratory factor analysis
covariance. Due to poor factor loadings of the indicators
The principal component extraction criterion using the of the construct “perceived behavioural control” it was
varimax rotation method was employed and the results excluded from the final analysis. Reliability and validity
are as shown inTable 3. Tests formodel sampling adequacy tests were conducted on the remaining constructs using
yielded satisfactory results as the Kaiser-Meyer-Olkin value the Cronbach alpha (CA) and the composite reliability
of 0.915 exceeded 0.7 threshold (Kaiser, 1970; Kaiser & (CR) scores. As shown in Table 4, the CA and CR score
Rice, 1974). Also, the Bartlett’s test of sphericity which for each construct exceeded the recommended threshold
confirms that the indicators are correlated yielded very of 0.70 (Fornell & Larcker, 1981; Nunnally, 1978) and
significant and satisfactory results (Chi-square = 4672.528, hence, are deemed reliable.
8 G. M. Y. OWUSU ET AL.
Table 4. AVE, CR, Cronbach alpha. results as displayed in Table 6 indicate that the fit indices
Average Variance Composite Cronbach are satisfactory since they are within the recommended
Construct Extracted Reliability Alpha thresholds (Byrne, 2010). Given the fact that all the fit
Ethics of tax evasion 0.51 0.87 0.88
(good purposes) indices are good, we conclude that the model supports
Ethics of tax evasion 0.50 0.83 0.85 the research hypotheses and thus tested the various
(bad purposes)
Attitude towards tax 0.51 0.79 0.83 hypotheses using this model.
evasion
Subjective norms 0.64 0.88 0.88
Moral Obligation 0.56 0.79 0.79
Intentions to engage in 0.75 0.90 0.90 Structural model results and discussions
tax evasion
Table 7 reports the estimated structural parameters, the
standardized estimations, and the final decision on
Validity tests (convergent and discriminant validity) whether the study hypotheses are supported or not.
were conducted following the guidelines prescribed by As shown in the table, a positive and highly significant
Hair, Black, Babin, and Anderson (2009). Convergent relationship was found between students’ attitude
validity was measured using the Average Variance toward tax evasion and intention to engage in tax
Extracted (AVE). As shown in Table 4, the AVE scores evasion (p-value<0.01). This implies that students who
for each construct met the recommended minimum have a favourable attitude towards tax evasion have
threshold value of 0.50 (Hair, Hult, & Ringle, 2013). To greater motivation to engage in tax evasion. As indi-
establish the distinctiveness of the constructs, discriminant cated by Ajzen’s (1991) theory of planned behaviour,
validity test was performed using the Fornell–Larcker cri- a person’s favourable attitude towards a particular
terion which prescribes that the AVE of each construct behaviour influences his/her intention to perform that
should be greater than the squared correlation of that con- behaviour whereas an unfavourable attitude hinders
struct with other constructs. Results of this test as presented a person’s intention to perform the behaviour. In line
in Table 5 show that discriminant validity is assured as the with the prediction of this study, hypothesis 1 is sup-
AVE scores are higher than the squared cross-correlations ported. Empirically, this finding is consistent with
of the constructs. existing studies (Alleyne & Harris, 2017; Eriksen &
Fallan, 1996; Kirchler et al., 2008; Trivedi et al., 2004)
that found the attitude of individuals to be positively
Structural model analysis
associated with their intention to evade tax.
Testing of hypotheses was performed using structural Our second hypothesis which examines the relation-
equation modelling technique. The structural model as ship between students’ subjective norms and intention
shown in Figure 1 was tested using Analysis of a Moment to engage in tax evasion also yielded a positive and
Structures (AMOS) version 21. statistically significant relationship between the two
constructs (p-value <0.01). This finding thus, suggests
that the intentions of students to engage in tax evasion
Model fitness and structural model results
may also be influenced significantly by the level of
The overall fitness of the model was assessed using three importance they attach to the opinions of other signifi-
model fit indices: incremental fit, absolute fit and parsi- cant individuals in society in making decisions.
mony fit. The specific indices tested were Goodness of Fit Students who consider the opinions of significant peo-
Index (GFI), Adjusted Goodness of Fit Index (AGFI), Root ple in their life such as family members, friends, super-
Mean Square Error of Approximation (RMSEA) and Chi- visors, co-workers and others are more likely to engage
square/Degrees of Freedom (CMIN/DF), Absolute fit in tax evasion when they perceive that these significant
includes Comparative Fit Index (CFI), Tucker–Lewis others would endorse such a behaviour and vice versa.
Index (TLI) and Normed Fit Index (NFI), Parsimony As pointed out by Ajzen (1991), the views and opinions
Good Fit (PGFI) and Parsimony Normed Fit (PNFI). The of significant others could be an important predictor of
Table 5. Measures of discriminant validity.
Constructs Good Bad Attitude Subjective Norms Moral Obligation Intention
Good 1 0.265 0.204 0.08 0.141 0.054
Bad 0.515 1 0.08 0.068 0.091 0.06
Attitude −0.452 −0.282 1 0.471 0.048 0.233
Subjective Norms −0.282 −0.261 0.686 1 0.108 0.215
Moral Obligation 0.375 0.302 −0.218 −0.328 1 0.085
Intention −0.233 −0.245 0.483 0.464 −0.292 1
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 9
Figure 1. Structural model.
an individual’s behavioural intentions to perform they have a sense of responsibility towards the state, for
a particular behaviour. This finding compares favour- instance, will respond to tax evasion issues differently
ably with some existing studies (Alleyne & Harris, 2017; from those who do not believe they are responsible to
Bobek et al., 2007; Cullis & Lewis, 1997; Richardson, the state in the payment of taxes. This finding compares
2006; Torgler, 2003; Tsakumis et al., 2007) that report favourably with some existing studies (Alleyne &
that subjective norm influences intentions to engage in Harris, 2017; Culiberg, 2018; McGee, 1999; Reckers
tax evasion. et al., 1994; Torgler, 2003) that found moral obligation
In terms of the relationship between the measure of to be an important predictor of a person’s intention to
moral obligation and intentions to engage in tax eva- engage in tax evasion. In line with the prediction of this
sion, findings suggest the existence of a negative and study, hypothesis 4 is thus, supported.
highly significant relationship between the two con- Our fifth hypothesis which tests the relationship
structs (p-value<0.01). Based on the descriptive statis- between students’ ethical views when taxes are used for
tics which clearly demonstrate that most respondents good purposes and intention to engage in tax evasion
generally consider tax evasion to be morally wrong, this resulted in a positive but statistically insignificant rela-
finding implies the intention to engage in tax evasion tionship between the two constructs. However, the rela-
will be low when an individual perceives the act to be tionship between students’ ethical views when taxes are
morally wrong. Thus, the personal beliefs about right used for bad purposes and intention to engage in tax
and wrong of an individual based on his/her own evasion yielded a statistically significant relationship
internalized ethical rules has important implications with a negative coefficient. This implies the motivation
on the intention to evade tax. Individuals who believe to engage in tax evasion will still be low even when the
10 G. M. Y. OWUSU ET AL.
Table 6. Indices for structural model. The findings from the study suggest the intention to
Type of Quality of Fit Recommended Structural evade tax among the respondents is quite low and that
Category Measure Value Model Explanation most of the sampled students view tax evasion as an
Probability 0.05 0.000 Good
Incremental Goodness of Fit >0.90 0.922 Good unethical practice even when tax revenues are perceived
Fit Index (GFI) not to be properly used by the state. From our descriptive
Adjusted >0.90 0.902 Good
Goodness of Fit analysis, it appears the sampled students generally sub-
Index (AGFI) scribe to the absolutist view which argues that tax evasion
Root Mean <0.08 0.049 Good
Square Error of is always or almost always unethical and therefore have
Approximation lower motivations to engage in tax evasion. The results
(RMSEA)
Chi-square <5.0 2.556 Good from the structural model suggest that students’ attitudes
/Degrees of and subjective norms have a positive influence on their
Freedom intentions to engage in tax evasion whilst an inverse
(CMIN/DF)
Absolute Fit Comparative >0.90 0.949 Good relationship exists between moral obligation and inten-
Fit Index (CFI) tions to engage in tax evasion. Also, it was found that
Tucker-Lewis >0.90 0.941 Good
Index (TLI) students’ ethical views on taxes have important implica-
Normed Fit >0.90 0.919 Good tions on their intentions to evade.
Index (NFI)
Parsimony Parsimony >0.50 0.735 Good Findings of this study offer some useful insights into
Fit Good Fit Index the tax payment behaviour of the youthful population
(PGFI)
Parsimony >0.50 0.792 Good who arguably constitute the backbone of every state. An
Normed Fit understanding of the intentions of students towards tax
Index (PNFI)
evasion and the predictors of such intentions may be
valuable to policy makers interested in promoting good
Table 7. Regression output. tax compliance behaviour among would-be tax payers.
Path co- Given that the ethical orientation and moral issues
Hypothesis path efficient P-value Result affect the intention to engage in tax evasion, an impor-
Ethics of tax evasion (Good) → intention 0.073 .168 Rejected tant way of promoting responsible tax compliance
to engage in tax evasion
Ethics of tax evasion (Bad) → intention −0.102 .048 Accepted behaviour among would be employees is to emphasize
to engage in tax evasion the teaching of ethics and the promotion of ethical
Attitudes towards tax evasion → 0.354 .000 Accepted
intention to engage in tax evasion behaviour at the university and other training institu-
Subjective norm → intention to engage 0.193 .006 Accepted tions aimed at inducing in individuals a sense of moral
in tax evasion
Moral obligation → intention to engage −0.170 .000 Accepted obligation towards the payment of taxes.
in tax evasion Again, given that individuals with positive attitudes
towards taxes are less likely to engage in tax evasion,
respondents believe tax revenues are not used appropri- governments and tax authorities could fashion out pro-
ately by the state. This result reinforces the point that grammes aimed at sensitizing would-be taxpayers on
respondents generally perceive tax evasion as unethical the need to pay taxes and the consequences for non-
irrespective of whether the taxes are used for good or bad compliance to shape their attitudes favourably with
purposes. Given that most of the respondents are yet to be respect to the payment of taxes. This can be achieved
robed into the tax net, this view offers some hope to the by deploying effective communication programmes
country in the future as compliance levels are likely to be such as seminars, symposiums and media education
high when individuals consider evasion to be unethical. to sensitize the public on their civic responsibility to
the state through the payment of taxes.
Despite the contributions of this study, the findings
Conclusion
are limited in some regards. Findings of this study only
The study examined the views of some university students reflect the intentions of people to engage in tax evasion
on the ethics of tax evasion, their intentions to engage in and the factors that predict such intentions and not the
tax evasion and the factors that influence such intentions. actual tax evasion behaviour. Moreover, the study relied
Using the extended version of TPB as the theoretical frame, on the views of students from a single public university in
the study investigated the influence of attitude, subjective Ghana most of whom are yet to be employed as workers.
norm, perceived behavioural control and moral obligation Whilst their present view may be useful indicators for
on the intention to evade tax and also ascertained whether predicting actual tax compliance behaviour in future, this
the intention to evade tax could be explained by reference view can change in the future. Care should therefore be
to respondent’s stance on the ethics of tax evasion. taken in the interpretation of the findings.
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 11
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