The Effect of Taxpayers Attitudes towards the Legal System and Government on Tax Morale (With Reference to Selected Assesses in Addis Ababa, Ethiopia)

Abstract

The overall purpose of this study was to assess the effect of taxpayers’ attitudes towards the legal system and government on tax morale. The researchers used survey method for the study. Data for the survey study were collected from the target populations by means of self administered questionnaire. From the populations the sample was select by using stratified sampling to obtain a representative sample from taxpayers of business organization. An ordered probit model is employed to analyze the effect of taxpayers’ attitudes towards the legal system and government on tax morale. The results showed that tax morale (dependent variable) is correlated at 0.4982 with attitude of taxpayers towards government and legal system at 5 percent significance level and there is a significant relationship between taxpayer attitude towards the legal system and government, and tax morale at a p value of 0.001 and 0.000 and has a significant positive effect on tax morale, with higher marginal effects. They have a statistically significant positive effect on tax morale. Therefore, governance quality seems to be a key component in the understanding of tax morale. Hence, governments are called to create confidence in their credibility and their capacity to deliver promised returns for taxes. The government should build trustworthy institutions; much weight should be put on developing a trustworthy ground so that taxpayers feel comfortable with paying taxes.

Keywords: Tax morale, Legal System, Government