Emotions and tax compliance among small business owners: An experimental survey

Olsen J., Kasper M., Enachescu J., BENK S., BUDAK T., Kirchler E.

INTERNATIONAL REVIEW OF LAW AND ECONOMICS, vol.56, pp.42-52, 2018 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 56
  • Publication Date: 2018
  • Doi Number: 10.1016/j.irle.2018.05.004
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.42-52
  • Keywords: Emotion, Affect, Tax compliance, Tax behavior, Slippery slope framework, GENERAL STRAIN THEORY, EMPIRICAL-ANALYSIS, DETERRENCE, IMPACT, TRUST, FOUNDATION, PUNISHMENT, EVASION, CRIME, POWER
  • Inonu University Affiliated: Yes


Tax authorities' power to enforce compliance as well as taxpayers' trust in the tax agency shape taxpayers' compliance behavior. But while financial decisions often trigger strong emotional responses, little is known about the relation between taxpayers' emotions and their compliance choices. We hypothesize that emotions mediate the relationship between the perception of tax authorities and intended tax compliance. In a scenario-based experiment with 411 self-employed Turkish taxpayers, we find that highlighting authorities' enforcement capacity (i.e. high power) induces negative emotions while elevating enforced compliance and the readiness to evade. Trust, on the other hand, reduces negative emotions and raises positive feelings, which are associated with intentions to comply voluntarily. Moreover, a combination of high power and high trust reduces negative feelings and increases intentions to comply while undermining the readiness to evade. Our findings suggest that emotions matter in shaping compliance. Specifically, enforcement efforts that induce negative emotions might have negative compliance implications. (C) 2018 Elsevier Inc. All rights reserved.