Exploring Tax Decision Factors: A Perspective from North Indian Tax Practitioners

Abstract

Taxation policy constitutes a very important position in Government’s focus on macro-economic management and development of the state. The lack of adequate financial resources has made economies especially developing ones to focus upon tax performance more vigorously. Compliance is not everything about enforcement for tax collections alone; it carries attempts of modern day states to build an obedient and self-policing society. In this context, tax practitioners play a crucial role in creating the same. Tax practitioners act as fundamental allies of taxpayers while they also carry a legal obligation to obey tax laws when professionally advising their clients. The present study attempts to explore the underlying factors behind tax professionals’ ethics based decision making process. For the purpose of statistical analysis, a structured questionnaire was employed building upon a four-dimensional framework of tax ethics. The survey data has been collected from a sample of 316 individual tax practitioners from three major provinces of North India – Punjab, Haryana & Himachal Pradesh using non-probability snowball sampling technique during July-Dec. 2021. The statistical results revealed tax practitioners’ ethics is indeed reflected by the postulated framework. Three of the postulated hypothesis namely stakeholder view, Machiavellian scale & compliance costs were found as significantly influencing tax ethics thereby signifying a relationship between practitioners ethics and these dimensions. The survey findings carry important managerial implications for improving the responsiveness of tax revenue performance under dynamic economic settings.