The studies which have been conducted in the U.S.A indicate two opinions; the perspective of the first opinion is the tax evasion is unethical most of the time not all of the time. It is ethical in some cases such as when the government is using the taxes in an unjust war. The second opinion shows that the tax evasion is unethical all the time, in other words there no justification of tax evasion.
The United Kingdom doesn't undergo the tax evasion as a big problem. The tax authority in U.K doesn't consider the number of taxpayers, but they are thinking about tax evasion to become a public ethical.
Australian people believe that there are some justifications for tax evasion such as the corruption in the government system and the high rate of tax or if the taxpayer is unable to pay.
A majority of the sample population in New Zealand considered tax evasion is never justified. But a substantial minority considered tax evasion to be justifiable in some cases. But generally, most of Chinese people think that tax evasion is ethical even though without justifications.
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As a general perspective, Japanese people are opposed to tax evasion, but there are still some factors that affect this perspective, such as sex, age, education, religion and marital status.
The study indicates that there is tax evasion in Thailand and the reasons of tax evasion are the corruption in the governmental system and the unfair system.
In Hong Kong tax evasion is ethical under some circumstances, such as the corruption in the governmental system. And also other justifications are unacceptable such as selfish motivations. German people believe that the tax evasion is unethical in some cases and ethical under some circumstance. The age is very important to change the viewpoints of the people. Tax evasion is ethically justifiable at least in some cases in Romania. There are several reasons motivate the people to evade the tax such as the corruption.
There are many justifications of tax evasion in Ukraine, some of them are strong and some others are weak. Such as the high rate of the tax, unfairness of tax system.
Polish people believe that tax evasion is always, or almost always unethical, and in some cases it is ethical. The strongest arguments justifying tax evasion occur when the government is deemed to be corrupt. From other perspective the tax evasion is justified in Kazakhstan if the tax rates are too high or if the taxpayer is unable to pay.
The problem of tax evasion has increased over the investigation period in Tanzania, whereas a small or no increasing in the coefficient over the years in Kenya. Although the view that tax evasion is ethical in at least some cases has wide support in Argentina, there is also a strong feeling that tax evasion is unethical in some cases.
In Dominican Republic tax evasion is morally acceptable in some cases. The strongest arguments to support tax evasion are related to strictly economic reasons.
Guatemalan people believe that tax evasion is unethical, but may be ethical under certain circumstances such as: where the tax system is perceived to be unfair. There are differences between the male and female respondents, so we can say that the gender may influence the viewpoints of tax evasion.
Most of the studies conducted about the tax evasion focused on practitioner or legal perspective. (Mc Gee & Lingle, 2006) There are not many studies have paid attention to the ethical aspects. Martin Crowe is a catholic priest who proposed a comprehensive study in 1944 on the ethical of tax evasion which is deemed a survey of philosophical and religious aspects. Crowe found that over the centuries there are three positions: never ethical, always ethical or ethical under certain facts and circumstances. (Mc Gee, 2006a)
In the current century, there is a study that was conducted by Torgler (2003) in which he just focused on the empirical aspects of the tax evasion, and ignored the ethical aspects. In such case, it could be said that most of the tax evasion studies are related only to the economic and public finance issues because they have tangible effects, on the other hand, the intangible side of tax evasion was ignored such as the philosophical and ethical viewpoints.
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Furthermore, there are some studies conducted to show the religious opinions. From the Muslims opinion there is a study has been carried out by Murtuza and Ghazanfer in 1998. They examined their religious literature and reported that Muslims have a duty to God to contribute to the poor. They did not indicate the relationship between the individual and the government. In 1997 and 1998 there are other surveys were conducted by McGee a non- Muslim researcher, who found that the tax evasion may be justified if the tax will increase the prices or when the tax are imposed on the income.
The Christian perspective, as it is mentioned above, looks at the tax evasion from three positions according to Crowe's study (1944). Other studies have concluded many results, such as Pennock in 1998 who concluded that tax evasion was ethical in cases if the country is using the taxes in an unjust war. Other study was made by Morales in 1998 who indicated that the family is more important than the government; in other words, the man must feed his family more than to feed the government. Also, Gronbacher and Schansberg (1998) concluded that the catholic religious literature permits tax evasion in certain situations, a view that concurs with the Crowe (1944) study.
Regarding the Jewish perspective, there are some studies have been carried out to point out their perception. Two philosophical studies of the ethics of tax evasion were conducted by Cohn and Tamari in 1998 who concluded that tax evasion is never, or almost never ethical. A third Jewish study, which was both philosophical and empirical in nature was been done by McGee and Cohn in 2006 who found that although the Jewish literature was firmly against tax evasion on ethical grounds, the Jews who were surveyed were more flexible on the issue. (Mc Gee, 2006a)
As an international perspective of the tax evasion, there are many studies have been conducted by McGee in many countries around the world. He selected the countries from North America, South America, Europe, Asia, Australia and New Zealand. Some of his studies were comparisons among two or more than two countries, and the other studies just looked at one country and explained the viewpoints related to the tax evasion ethics in that country.
2.0 Research Objective
In this paper, a comprehensive comparison in a descriptive analysis of the views of ethics of tax evasion is conducted for several selected countries around the world. This includes countries from North America, South America, Europe, Asia, Africa, and Australia followed by the discussion and conclusion in the last section.
There is no universal perception about the ethics of tax evasion that is, partly, because different countries are addressing the issue of the ethics of tax evasion from varying angles. Every single country in this universe has a country-specific framework of legal, institutional, and cultural factors. Those factors work as determinants of the tax evasion ethics perception around the world as it is shown below:
3.1 Ethics of Tax Evasion in U.S.A
The United States is the most developed country in the world, and Americans are more opposed the tax evasion than the other countries in the world, even though it still suffers the tax evasion. The most factors that probably influence the tax evasion in the United States are as follows: gender, age and education (Mc & Bose, 2007). It was found that females were against the tax evasion more than the males. (Mc Gee & Palau, 2007)
Normally, the studies, which have been carried on the United States, indicate two opinions: (Mc Gee & Lingle, 2006)
The tax evasion is unethical most of the time not all of the time: It is ethical in some cases such as when the government is using the taxes in an unjust war, or the tax system is unfair, where there is a corruption or where the government engages in human rights abuses.
The tax evasion is unethical all the time: even though the government is using the tax in illegal uses.
3.2 Ethics of Tax Evasion in U.K
The United Kingdom doesn't undergo the tax evasion as a big problem. In other words, tax evasion is not a major problem in U.K. But they endure major reorganizations since the 1970s with a view to meeting public concern about the extent of tax evasion.
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The Inland Revenue and Customs and Excise, which are deemed the departments for tax assessment and collection in U.K, don't consider the number of taxpayers, but they are thinking about tax evasion to become a public ethical.
Generally, British come at the top of the pyramid among the people of the world in terms of their views of tax evasion as an unethical and illegal behavior, and considered the most people of the world paying taxes, whether direct tax or indirect tax. (Parker, 1990)
3.3 Ethics of Tax Evasion in Australia
The study that has been conducted in Australia by Mc Gee & Bose, (2007) concluded that there are many reasons make the people evade the taxes, and they consider these reasons justify tax evasion. In other words, they believe that there are several justifications through which the tax evasion is considered ethical. Those justifications can be highlighted as the following:
The corruption in the government system.
If the government is spendthrift.
If the tax system is considered to be unjust.
If the government engages in human rights abuses.
If the tax rates are too high or if the taxpayer is unable to pay.
To reduce tax evasion, the government must eliminate those justifications and seek to satisfy its citizens of the fairness of the tax they pay and the importance of this source to achieve the society welfare.
3.4 Ethics of Tax Evasion in New Zealand
There is a study was conducted to make a comparison among three countries: U.S.A, Australia and New Zealand. The study conducted on the three countries took into account several considerations such as age, sex and the education. New Zealand is similar to the two other countries which were compared with. A majority of the sample population considered tax evasion is never justified. However, a substantial minority considered tax evasion to be justifiable in some cases.
Giving more details, the results of the study conclude that New Zealand and Australia approximately are similar in some aspects such as age and education, but we can not say the results are same, because there are differences between them in the gender according to the current study (Mc Gee & Bose, 2007)
3.5 Ethics of Tax Evasion in China
Most of Chinese think that tax evasion is ethical even though without justifications. They think it is ethical even:
Most of the money collected is spent wisely.
A large portion of the money collected is spent on worthy projects, which do benefit them.
The probability of getting caught is low.
Tax rates are not too high because the government is not entitled to take as much as it is taking from them.
Like any other country in the world, there are some factors that influence the ethics of tax evasion in China. The gender and the education are the most important factors in China:
The gender: Some studies concluded that the women are more ethical than the men, whereas other studies have found that the men and women are equals. While a few studies found the men more ethical than the women.
The education: The study that has been done focused on the undergraduate and graduate students. The opinions of graduate students are more important than undergraduate students, because they are older and mature and their thinking is better than how undergraduates are thinking and recognize the economic situation as well.
(Mc Gee& An, 2007)
3.6 Ethics of Tax Evasion in Japan
There is a study have been done in three countries: Japan, China and Korea. Generally Japan opposed to tax evasion more than the other two countries. The tax evasion in Japan is influenced by five factors:
The gender: women were significantly more opposed to tax evasion than Japanese men.
The age: The people tend to become more opposed to tax evasion when they get older. This could be because older people have more respect for government and the rule of law than do younger people.
The education: People tend to be less opposed to tax evasion as their level of education increases. Also the people they have high level education normally have high income that make them pay the tax without trouble.
The religion: The study found that that Buddhists and atheists/agnostics tend to be more opposed to tax evasion than do Christians.
The marital status: The divorced are the strongest opposition to tax evasion whereas the least opposition to tax evasion occurred in the single/never married.
(Mc Gee, 2007)
3.7 Ethics of Tax Evasion in Thailand
The study which has been conducted in Thailand focused on the viewpoints of the accounting students. This group is considered the best one to study the topic of ethics of tax evasion on because the accounting students can recognize the effectiveness of tax evasion better than the others. Also, universities' students are going to be leaders of businesses and decision makers in the future.
This study found that the reasons of tax evasion in Thailand are summarized in the following:
The corruption in the governmental system.
The unfair system.
So to reduce the extent of tax evasion, they must reduce government corruption and reduce the perceived unfairness of the tax system. (Mc Gee, 2006b)
3.8 Ethics of Tax Evasion in Hong Kong
There is a study has been carried out to compare the viewpoints between HK and the US. In this study, the authors tried to examine the opinion of accounting and business & economics students at the Hong Kong Baptist University to determine their perceptions of the justifications for tax evasion. Furthermore, the study also aimed to find out whether cultural, legal and other differences may account for differing perceptions on tax evasion.
Generally, tax evasion is ethical in some cases and unethical in other cases, in other words tax evasion is ethical under some circumstances, and it is viewed as never or almost never ethical. Some justifications of tax evasion are strong such as in cases where the government was corrupt, and when the system is unfair. And other justifications are weak such as some selfish motivations. As a behavior to reduce tax evasion from the citizens' viewpoints, the government must prepare the financial system to reduce the corruption and increase the capacity to pay the tax. (Mc Gee & Ho, 2006)\
3.9 Ethics of Tax Evasion in Vietnam
In the Vietnam context, there are several differences regarding the ethics of tax evasion that distinguish it from the other countries. The most important finding which has been concluded in the Vietnam case is that the gender, age, education, religion and marital status don't play a significant role to effect the looking at tax evasion as ethical or unethical. Furthermore, the strongest finding of the present study is that there is a very little support for the tax evasion on moral grounds. (Mc Gee, 2006c)
3.10 Ethics of Tax Evasion in Germany
In Germany, a study was conducted to compare the tax evasion with U.S.A. This study achieved the goals which are:
Determine the viewpoints of various groups on the issue of tax evasion.
Rank the various arguments that have been used to justify tax evasion over the last 500 years to determine which arguments are strongest and which are weakest.
Like many countries Germans believe that the tax evasion is unethical in some cases and ethical under some circumstance. The age is very important to change the viewpoints of the people. That means the opposition to tax evasion is more with the old people than the younger. In other words, the people become more ethical as they get older.
Some of the viewpoints refer the tax evasion to discriminate on the basis of religion race, and ethnicity, especially with the Jews in Germany.
But this study was focusing on MBA students and International Business students. The Respondents results of those students indicate that there is a widespread feeling that tax evasion is justified in some cases.
They most strongly disagreed that tax evasion is ethical when the money collected is spent wisely. They furthermore made no differences between whether the tax money benefited them or not, seeing tax evasion as unethical in either case. Even if the probability of getting caught was low and even if the tax rates themselves were too high, the students saw tax evasion as an unethical behavior. They also did not subscribe to the idea that it was OK since everyone was doing it. (Mc Gee et al, 2006)
3.11 Ethics of Tax Evasion in Romania
In Romania, the students at the Romanian-American University in Bucharest have been taken as a sample to conduct the study. The viewpoints in Romania were influenceed by some factors such as history, religion, sociology, anthropology and politics which made the differences between Romania and Bosnia, the country which was compared with in the study, in the Respondents results.
Tax evasion is ethically justifiable at least in some cases. This viewpoint agrees with most of the theological and philosophical literature that has been published in the last 500 years. But the same as other countries there are reasons motivate the people to evade the tax such as the corruption, the human abuses, high tax rate and spend tax funds unwisely. So for the government to reduce tax evasion, those reasons must be eliminated and reduce the tax level so that more people will not feel that they are unable to pay. Also the government has to relate the tax level and the individual income, so one way to measure the relative level of taxation is to compare tax revenue to the gross domestic product (GDP). (Mc Gee et al, 2007)
3.12 Ethics of Tax Evasion in Ukraine
The survey which was carried on in the context of Ukraine was translated into Russian and distributed to graduate students and advanced undergraduate students majoring in business (finance and accounting) and economics at Odessa Mechnikov National University and Odessa State Economics University.
Tax evasion in Ukraine as a transition economy is a widespread because of the lack of the sound infrastructure to collect taxes and the widespread belief on the part of taxpayers that there is little or no moral duty to pay taxes. There are many justifications of tax evasion in Ukraine, some of them are strong and some others are weak. In this study, the authors tried to rank those justifications from strongest to weakest. But like other countries, there are common reasons to justify tax evasion such as the high rate of the tax; unfair tax system; waste the money collected; and the governmental corruption. (Mc Gee & Nasadyuk, 2006)
3.13 Ethics of Tax Evasion in Poland
The study, which was done in Poland, indicates that the tax evasion is always, or almost always unethical, and in some cases it is ethical. The strongest arguments justifying tax evasion occur when the government is deemed to be corrupt or when the tax system is perceived to be unfair. This finding has important policy implications. From these findings, one might reasonably conclude that the extent of tax evasion might be reduced if government is perceived as being less corrupt or if the tax system is deemed to be fair. The survey was conducted and distributed to a group of economics students at the Poznan University of Economics in Poland in order to learn the existing views on tax evasion in Poland. If the study replicated by using other group may be other result could be found, such as law students and business people, but it is better to use the economic students to conduct the study because the strong relationship between the tax and the economic and those students are going to be the leaders of businesses in the future, also they don't got influenced by communist political system which was available in the past, so the economic students could be a good standard to measure the correct opinion to tax evasion, even though most of the people are influenced by communist political system but it is going to disappear in the nearest future, so the best way is using the students which have a modern opinion and mind. (Mc Gee& Bernal, 2006)
3.14 Ethics of Tax Evasion in Kazakhstan
There was a study conducted in Kazakhstan to determine the viewpoints of the students on the ethics of tax evasion. The strongest arguments of tax evasion, from their perspectives, are the corruption of the government, also if the government is wasteful, and if the tax system is considered to be unjust or if the government engages in human rights abuses. Tax evasion might also be justified by some people if the tax rates are too high or if the taxpayer is unable to pay. Also there are other weak arguments such as in cases where taxpayers receive something in return for their money or where the tax funds are spent wisely.
The results of the study show that, although the view that tax evasion is ethical in at least some cases has wide support, there is also a strong feeling that tax evasion is unethical in some cases. Under some circumstances, tax evasion is viewed as never or almost never ethical. (Mc Gee & Preobragenskaya, 2007)
3.15 Ethics of Tax Evasion in Kenya & Tanzania
There are no many studies were conducted in Africa because most of the African countries suffer the weakness in their economic. But there is a study has been conducted in two countries in east Africa: Kenya and Tanzania. Those two countries are considered relatively better than other countries there, whereas they have manufactures and global trade with the rest of the world.
The authors, in the paper, tried to estimate the amount of tax evasion in customs authorities in both Kenya and Tanzania by calculating measurement errors in reported trade flows between the two countries and correlate those errors with tax rates.
As a methodology of the study has been done the authors focused on four issues:
figure out whether there is any correlation between the measurement error, as reported by the trade gap, and the tax rate in both Tanzania and Kenya. This is done in two ways where they first use data on imports and exports reported in values.
Analyze the trade gap to know whether it is due to a higher taxed.
Analyze if there is any difference in the magnitude of the coefficient on tax rate in the two countries. If the answer is yes, that would imply that tax evasion is more severe in that particular country.
Introduce other country to compare with the two countries. They selected U.K to achieve this goal, because it enables them to undertake a similar analysis between the UK and Kenya and Tanzania respectively.
The standard which has been used in this study to measure the effect of tax evasion in those tow countries is the Fisman and Wei approaches.
The findings of this study are as follows:
The problem of tax evasion has increased over the investigation period in Tanzania, whereas a small or no increasing in the coefficient over the years in Kenya.
The Tanzanian Customs Authority is less efficient in collecting tax revenues compared to Kenya's counterpart.
The tax rates in both countries are very high compare with other countries, but in Tanzania is higher than Kenya.
(Levin& Widell, 2006)
3.16 Ethics of Tax Evasion in Argentina
This study was carried out to survey the opinions of graduate and advanced undergraduate business, economics, theology, philosophy and law students at Austral University in Argentina in order to learn their views on the ethics of tax evasion. This group was selected because they will be the future business and political leaders of Argentina. Like many countries, there is some factors influence the viewpoints of tax evasion such as the gender and education.
The results of the study show that, although the view that tax evasion is ethical in at least some cases has wide support, there is also a strong feeling that tax evasion is unethical in some cases. Under some circumstances, tax evasion is viewed as never or almost never ethical.
The arguments of tax evasion are strong sometimes, and weak other time. The strongest arguments, which were mentioned in the study, are the governmental corruption, unfairness of the system and when the human right were been violated. So to reduce tax evasion the government should reduce those justifications. (Mc Gee& Rossi, 2006)
3.17 Ethics of Tax Evasion in Dominican Republic
The study which has been done in Dominican Republic used a survey distributed to 177 students at a university in the Dominican Republic.
According to this study tax evasion is morally acceptable in some cases. The strongest arguments to support tax evasion, from the opinions of the students in Dominican Republic, were arguments related to strictly economic reasons, and also that the ability of taxpayers to pay taxes is influenced by the high tax rates due to an unfair system. The weakest arguments to support tax evasion, from their opinion too, are related to government actions not having to do with economic issues, such as discrimination against taxpayers because of religion, race or ethic background and the imprisonment of people due to their political opinions. Other reason of tax evasion that Dominicans may support tax evasion refers to economic consideration rather than ethical considerations. If governments want to reduce the extent of tax evasion, fair tax policies should be adopted by the government and tax rates should not be viewed as excessive. (Mc Gee et al, 2006)
3.18 Ethics of Tax Evasion in Guatemala
There is a study was conducted in Guatemala to learn the views of the future opinion leaders of Guatemala. The survey was distributed to graduate and upper division undergraduate business and law students at Universidad Francisco Marroquin in Guatemala.
The results of the survey reveal that tax evasion is unethical most of the time but not all of the time. In other words, they believe that tax evasion is unethical, but may be ethical under certain circumstances such as: where the tax system is perceived to be unfair, where there is corruption or where the government engages in human rights abuses. There are differences between the male and female respondents, so it could be outlined that the gender may influence the viewpoints of tax evasion. (Mc Gee & Lingle, 2006)
4.0 Discussion and conclusion
Despite the fact that there are many studies conducted about the issue of tax evasion around the world, almost all of them have focused on the practitioner or legal perspectives, ignoring the ethical aspects of the tax evasion. In this study, the literature of the ethics of tax evasion has been reviewed for several countries around the world to investigate in a comparative approach the similarities and differences in the perceptions of the people around the world regarding whether the tax evasion is considered an ethical or unethical issue.
In this paper, it could be concluded that the perceptive of the ethics of tax evasion around the world countries can be categorized into three groups of countries as follows: (1) countries perceive tax evasion as an ethical issue. This includes UK (2) Countries perceive tax evasion as unethical issue. This includes China and (3) countries perceive tax evasion is an ethical issue in some cases and unethical in the other cases. This includes the rest of the countries investigated in this study.
Furthermore, the third group of countries considers tax evasion as an ethical issue if one of the following cases has occurred:
If the government's system is corrupt,
If the government is spendthrift,
If the tax system is considered to be unjust,
If the government engages in human rights abuses, and
If the tax rates are too high or if the taxpayer is unable to pay.
Looking at the justifications of tax evasion above, it is worth to mention that taxpayers, naturally, don't like to pay money without getting any direct benefits. As a result, they intentionally look forward to evade the tax, but the ethics and regulations stop them to do that. But, when they find justifications and the opportunity to do so, they would not hesitate to take the chance, in most cases. In so doing, governments are recommended, as an important factor to reduce tax evasion, to satisfy their citizens by directing the resources collected from the tax revenues toward the objective of achieving the society welfare, to support not the unfair projects, and to adjust tax laws to meet the capabilities of taxpayers.
Also, it is recommended that countries suffering form high rates of tax evasion should get benefit from the experience of the countries which have low rates of tax evasion like U.K.
It is found that the demographic information factors play a very important role to influence the viewpoints of tax evasion. Those factors are: gender, age, education, religion and marital status. Some of the countries have a significant effect by those factors such as U.S.A, New Zealand, China, Japan, Argentina and Guatemala. To highlight the important factors found, the following could be summarized:
The women opposed tax evasion more than the men, so when the number of the women in the society is more than the men, it will be more opposed to tax evasion.
The people tend to become more opposed to tax evasion when they get older, so when the structure of the society is consisting many old people that will make this society more opposed to tax evasion.
The educated people more opposed to tax evasion than uneducated, so the ignorant and illiterate society will be less opposed to tax evasion.
Some of the religious scholars have strong opposition to tax, such as some of the Muslims scholars which have an opinion forbidding the tax, so the society like this will be less opposed to tax evasion.
The divorced are more opposed to tax evasion, so this opposition will be increased when the rate of divorce increase.
To bring to light one of the important points concerns the factors influencing the tax evasion that have been outlined by the studies reviewed in this paper, it is a matter of an important deal to categorize those factors to two groups: The first group includes the gender and the marital status. Those factors were found to influence the degree of tax evasion without giving satisfactory explanations on how those factors influence the degree of this issue. On the other hand, the second group of factors includes the education, age and religion. It was clarified on how those factors influence the perspective to tax evasion. To be more specific, educated people recognize the importance of the tax as a source of revenue for governments to achieve the society welfare and realize the consequences of evading more than what uneducated do. Therefore, this will encourage them to abide the tax rules. As for the age, it is evidenced that the elderly are more aware and respectful of the laws than the young people, which makes them less evaders of taxes. Also the religion is considered the best motivation for people to evade or not. When the religion forbids implementing tax in all cases, such as some Muslim scholars' opinions, this will make taxpayers evade the tax comfortably regardless the rules and governmental regulations about the tax. On the other side of the Islamic scholars who are against the tax evasion as it is a way of disobeying the leaders whom God ordered to obey them, taxpayers will implement what the religion is ruling them to do whether it goes in line with the government laws or against them.