Discussion Proceeding E Book 4A Turky

161 2005; and Gerbing, 1988. Thus, the findings provide support for Hypothesis 1 that fairness perceptions are multidimensional. Hypothesis 2 predicts that fairness perceptions will positively influence compliance behavior. Specifically, the hypothesis suggests that the fairer taxpayers perceive the tax system, the more likely they will comply with their tax obligations. However, this is only correct for overall fairness and vertical fairness. The findings support the concept in Equity Theory and are consistent with previous studies for example, Gilligan Richardson, 2005; Turman, 1995; Roberts, 1994; and Porcano Price, 1992. Other fairness dimensions, however, are not significant. Surprisingly, exchange fairness is found to have a negative effect on compliance behavior. A possible explanation for this is that the mean for the exchange fairness variable is below 4.0, suggesting that most respondents perceived the tax system as unfair. Similarly, the inverse relationship between administrative fairness and compliance behavior may be attributable to the fact that the respondents are neutral about administrative fairness as indicated by its mean of 4.0. Tax knowledge proves to have an influence on exchange fairness and administrative fairness. The findings, however, do not provide support to Hypothesis 3 which predicted that tax knowledge will positively influence fairness perceptions. Also, the findings are not consistent with previous studies Fallan, 1999; White et al., 1990; and Harris, 1989, which claimed that tax knowledge will increase fairness perceptions. The negative relationship, on the other hand, suggests that taxpayers with a higher of level of tax knowledge found these fairness dimensions to be unfair. This result may have arisen because the majority of respondents have a good 162 knowledge of tax based on the fact that 73 percent have filed their tax returns more than five times and 50 percent are at least diploma or degree holders, and they perhaps felt that they are not receiving sufficient benefits in return for their tax paid. In relation to the inverse relationship between tax knowledge and administrative fairness, this is possibly due to the fact that the respondents are unsure about administrative fairness itself. With regard to tax complexity, the findings indicate that overall fairness, exchange fairness and administrative fairness are highly influenced by tax complexity. The findings are consistent with Hypothesis 4, which suggests that tax complexity has an inverse relationship with fairness perceptions. Specifically this study confirms that a lower level of tax complexity has positively influenced fairness perceptions as reported in previous studies Erich et al., 2006; Cialdini, 1989; Carroll, 1987; and Milliron, 1985. The use of the TPB model in tax compliance behavior offers a good explanation of taxpayers‘ behavior. Attitude and subjective norm proved to be significant factors but not the perceived behavioral control. While attitude and subjective norm have positive coefficients, the perceived behavioral control has a negative coefficient but not significant. In other words, the results suggest that the higher the attitude towards compliance, the more likely a taxpayer will comply with his or her tax obligations. Similarly, the higher a taxpayer‘s motivation to comply with his or her referent group, the higher would be their compliance. The findings provide support to Hypothesis 5a. This suggests that the TPB is not limited to predicting unethical behaviors in information systems Dwyer Williams, 2002 and other human 163 behaviors Paris Broucke, 2008; Guo et al., 2007; and Chang, 1998, but is also useful in explaining tax compliance behavior. The final hypothesis predicts that tax knowledge and tax complexity will positively and negatively influence perceived behavioral control. Specifically, I anticipate a higher level of tax knowledge will result in a higher perceived behavioral control while a higher level of tax complexity will result in a lower perceived behavioral control. The findings on these variables, however, show insignificant results with an exception to the influence of tax complexity on perceived behavioral control. Specifically, the results indicate that taxpayers‘ perceived behavioral control are higher when the level of tax complexity is low and vice versa. This is consistent with the hypothesis that tax complexity is inversely related with perceived behavioral control.

8. Conclusion, Limitations and Future Research

The study has identified several dimensions of fairness perceptions as being important determinants of compliance behavior. Furthermore, it provides evidence that attitude and subjective norm as highlighted in the TPB, are also significantly influential. This empirical evidence should add to the literature on compliance behavior. In New Zealand particularly, the findings would provide an important update on the existing evidence documented by Hasseldine et al. 1994 and Tan 1998. Furthermore, the findings should be beneficial to policy makers and the tax authority as they highlight the fairness dimensions and relevant factors that need attention. For instance, the tax authority and policy makers should pay more 164 attention to providing the necessary facilities or infrastructure for example, education, health, social welfare to taxpayers, in return for their tax paid. This implies exchange fairness, of which the taxpayers in this study were more concerned with. This study should also help tax researchers generally to understand the role of tax knowledge and tax complexity in fairness perceptions. For policy makers, the empirical evidence offers guidance in developing tax education and simplification programmes. Last, but by no means least, this study provides clear evidence that the TPB model has significant potential to contribute to the tax compliance literature. The extension to the TPB model in a tax environment seems to be a fruitful area for future research. This study, however, is not without limitations. First, the survey response rate of 10 percent is considered low by comparison to previous research. However, with an absolute number of 229 responses, this is sufficient to provide the basis for thorough analysis. Second, the convergent validity analysis on the constructs indicate a lower item loadings than the recommended threshold of 0.7 for some of the items. Notwithstanding the low loadings, the items are still acceptable for further analysis Chin, 1998. Future research should continue to extend the theoretical model of the TPB in the tax literature as it offers a good explanation of compliance behavior. Possibly researchers could decompose the TPB variables to gain a better insight into the determining factors. In addition, a survey on fairness perceptions among tax professionals would also be an interesting area for research.