Determinants of Tax Evasion Attitude of Individuals: Evidence from a Country Facing Fiscal Turmoil

Abstract

The purpose of this study is to investigate the determinants of tax evasion attitudes of individuals in Pakistan. Data is collected through survey questionnaires distributed to individual taxpayers in Lahore, Pakistan. For data collection, 300 hundred questionnaires were distributed to individual taxpayers through Tax Consultants, and a Google form quiz link was also shared on social media.  A total of 267 responses with a response rate of 66.75% were found duly filled and fit for data analysis. Correlation and regression analysis were performed on the collected data in Smart PLS software to highlight the determinants of tax evasion. The results of the study revealed that the tax evasion attitude of individuals is significantly influenced by tax knowledge, tax rates, and the taxation system. By focusing on these factors, the government can control tax evasion by individuals which would cause an increase in its tax revenues. The findings of the study suggest policymakers should conduct tax awareness campaigns to increase the tax literacy of individuals, decrease tax rates, and replace progressive taxation with fixed tax rates. The efficiency of the taxation system should be increased by emphasizing the governance of tax administration.