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Regulating More Effectively: The Relationship between Procedural Justice, Legitimacy, and Tax Non‐compliance
Author(s) -
Murphy Kristina
Publication year - 2005
Publication title -
journal of law and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.263
H-Index - 48
eISSN - 1467-6478
pISSN - 0263-323X
DOI - 10.1111/j.1467-6478.2005.00338.x
Subject(s) - legitimacy , procedural justice , business , equity (law) , compliance (psychology) , public economics , tax planning , enforcement , exploit , economic justice , tax reform , tax law , law and economics , tax avoidance , economics , political science , law , psychology , social psychology , computer security , neuroscience , politics , computer science , perception
In recent years, a significant number of middle‐income taxpayers have been making use of aggressive tax planning strategies to reduce tax. In many cases, it is unclear whether these are designed and used by taxpayers to minimize tax legally or to avoid tax illegally. Those that are designed to exploit loopholes in tax law need to be dealt with in a way that restores faith and equity to the system. But how can tax authorities best manage taxpayers who may have inadvertently become involved in such illegal tax planning practices? Using longitudinal survey data, it will be shown that attempts to coerce and threaten taxpayers into compliance can undermine the legitimacy of the Tax Office's authority, which in turn can affect taxpayers' subsequent compliance behaviour. Responsive regulation, which is based on principles of procedural justice, will be discussed as an alternative enforcement strategy.