Collusive vs. coercively corrupt tax auditors and their impact on tax compliance
Mawani, A. and Trivedi, V.U. “Collusive vs. Coercively Corrupt Tax Auditors and their Impact on Tax Compliance” Journal of Behavioral and Experimental Finance, Vol 30, June 2021
12 Pages Posted: 18 Nov 2021
Date Written: June 17, 2021
Abstract
This study examines taxpayer compliance in the presence and absence of collusively corrupt tax
auditors and compares it to taxpayer compliance in the presence and absence of coercively corrupt tax auditors. Our experimental results show that overall taxpayer compliance declines in the presence of a collusively corrupt tax auditor who accepts bribes that leave the taxpayer economically better off. In contrast, taxpayer compliance increases in the presence of coercive tax auditors who demand moderate bribes. This may reflect taxpayers’ attempt to create a moral distance between themselves and the corrupt auditor. However, such economic sacrifices disappear when the level of bribe demanded by coercive auditors is increased to a higher component of reported income, suggesting that taxpayers may be willing to bear only relatively modest costs to morally differentiate themselves from coercive tax auditors.
Keywords: Collusive corrupt, Coercive corruption, Tax auditors, Tax compliance
JEL Classification: C91
Suggested Citation: Suggested Citation