Is deterrence approach effective in combating tax evasion? A meta-analysis

  • Received January 20, 2019;
    Accepted March 6, 2019;
    Published April 25, 2019
  • Author(s)
    Muh Dularif
    ORCID , Sutrisno T. , Nurkholis ,
    Erwin Saraswati
    ORCID
  • DOI
    http://dx.doi.org/10.21511/ppm.17(2).2019.07
  • Article Info
    Volume 17 2019, Issue #2, pp. 93-113
  • TO CITE АНОТАЦІЯ
  • Cited by
    9 articles
  • 1970 Views
  • 1015 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The purpose of this paper is to present the results of a meta-analysis of the relationship between determinant factors and tax evasion based on deterrence approach. Using the meta-analysis method, each statistical result of empirical studies is converted into r-pearson as standardized effect size, and then synthesized into a mean effect size in order to increase power and to resolve uncertainty. Theoretically, increasing audit, tax rate and tax penalty will decrease tax evasion. However, the results show that only tax rate has a significant impact on tax evasion. Synthesizing totally 478 outcomes from articles published between 1978 and 2018, there is a robust conclusion that decreasing tax rate is an effective tool in combating tax evasion. On the other hand, audit and penalty are not significant in influencing tax evasion. In addition, the results of heterogeneity analysis suggest that national culture and income level of the country are useful in explaining the impact of audit, tax rate and tax penalty on tax evasion. These findings should be of interest to policymakers. First, instead of sacrificing more resources in conducting audit or imposing more penalty, tax authorities should consider setting the tax rate as low as possible to diminish tax evasion. Second, considering that culture and income level influence the impact of audit and penalty on tax evasion, policymakers should consider national cultural values and income level condition when designing audit techniques and setting penalty structures.

view full abstract hide full abstract
    • Figure 1. Composition of papers and outcomes – audit
    • Figure 2. Composition of papers and outcomes – penalty
    • Table 1. The paper composition
    • Table 2. Results – vote-counting method – audit
    • Table 3. Results– vote-counting method – tax rate
    • Table 4. Results – vote-counting method – penalty
    • Table 5. Hypothesis testing – meta-analysis – audit
    • Table 6. Hypothesis testing – meta-analysis – tax rate
    • Table 7. Hypothesis testing – meta-analysis – penalty
    • Table 8. Moderator variables – audit
    • Table 9. Moderator
    • Table 10. Moderator variables – penalty
Related Articles

  • Meta-analysis of corporate governance in Asia

    Niki LukviarmanORCID Researcher ID, Arief Prima JohanORCID doi: http://dx.doi.org/10.21511/imfi.15(2).2018.24
    Investment Management and Financial Innovations Volume 15, 2018         Issue #2         pp. 267-280 Views: 1804 Downloads: 286 TO CITE АНОТАЦІЯ

    Research on corporate governance has been conducted extensively over the past few decades. However, the result of various studies failed to produce conclusive insight. This study is aimed at identifying, classifying, analyzing and interpreting previous research on corporate governance in Asia by using meta-analytical approach. By using the HOMA (Hedges-Olkin Meta-Analytical) procedures, the current study collected eighty articles from journals ranging from 1999 until 2017. Data were gathered from empirical scientific papers. Through rigorous research process, the current study found that most previous research on corporate governance in Asia observed the patterns of influence of various types of ownership structure and board characteristics on corporate performance. Ownership by family, government, and management tend to have a negative impact on performance, whilst institutional ownership and foreign ownership show positive effect on performance. The study reveals inconsistent result for frequency of board meetings, existence of family members on board, outside director, and board independence towards performance. Similar finding appeared for the relationship of performance to women on board and CEO duality. CGPI as the Corporate Governance Perception index and board size were found to have a positive consistency on performance. Apart from limitations of the study, the result suggests that there exists institutional and environmental specificity in the study of corporate governance in Asia that may be different from other context of study so that future researcher need to take a precaution of this matter.

  • Meta-analysis of the literature related to SDG 3 and its investment

    Inna MakarenkoORCID Researcher ID, Alex PlastunORCID Researcher ID, Mario SitumORCID Researcher ID, Yuliia SerpeninovaORCID Researcher ID, Giuseppe SorrentinoORCID doi: http://dx.doi.org/10.21511/pmf.10(1).2021.10
    Public and Municipal Finance Volume 10, 2021         Issue #1         pp. 119-137 Views: 1498 Downloads: 272 TO CITE АНОТАЦІЯ

    2020 revealed the vulnerability of the healthcare systems in most countries. It also highlighted their failure to generate serious progress in the fulfillment of Sustainable Development Goal 3 (SDG 3): Ensure healthy lives and promote welfare for all at all ages. One of the key problems inhibiting its progress is the lack of financial resources. Based on a comprehensive meta-analysis of the literature related to SDG 3 and its investment, it aims to demonstrate that lack of appropriate academic support is a part of the failure to generate serious progress in the fulfillment of SDG 3. To do this academic literature published in the period 2010–2019 is analyzed. SciVal Elsevier, VosViewer, and Google Trends tools are applied for analysis. The results show that there is a significant interest in the academic circles on SDG 3 alone. However, this interest is concentrated toward its medical aspects while economic aspects, including investment, are poorly represented. This study shows that the reason for the current investment gap in SDG 3 is the lack of academic support to provide a theoretical, methodological, and analytical framework for tackling the financing problem for SDG 3.

  • E-tax system effectiveness in reducing tax evasion in Nigeria

    Adegbola Olubukola OtekunrinORCID , Tony Ikechukwu NwanjiORCID , Damilola Felix EluyelaORCID Researcher ID, Henry InegbedionORCID , Temitope Eleda doi: http://dx.doi.org/10.21511/ppm.19(4).2021.15
    Problems and Perspectives in Management Volume 19, 2021         Issue #4         pp. 175-185 Views: 1386 Downloads: 685 TO CITE АНОТАЦІЯ

    This study examined how electronic tax system (E- tax system) reduces tax evasion in Nigeria. The survey sample was drawn from Federal Inland Revenue Service (FIRS) staff and small and medium-scale enterprise taxpayers registered in F.C.T., Abuja, Nigeria. Primary data was derived from a questionnaire administered to a population of 60 officials and employees of the FIRS and taxpayers at a small and medium-scale enterprise registered in F.C.T., Abuja, Nigeria. The secondary data used was extracted from the tax revenue collection report on the FIRS platform for 2000–2019 (20 years). The conclusive research design was used. General linear model and linear regression were used to analyze the data collected. The E-tax system was measured using actual tax revenues and the level of electronic tax services. In contrast, tax evasion was measured using tax compliance and mind-set of taxpayers towards E-tax system. Taxpayers’ attitudes towards E-tax system, actual tax revenue, tax compliance and the level of electronic tax services were used as mediating and control variables; thus, results established a significant relationship, and this relationship is an adverse one. The work shows that an effective electronic tax system will significantly reduce tax evasion. Therefore, the proper implementation of the electronic tax system helps mitigate the problem of tax evasion that causes economic and social detriments in the tax administration system.

Download Preview
Close
Problems and Perspectives in Management
Problems and Perspectives in Management