The Effect Of Trust Between Taxpayers And Tax Authorities On Tax Compliance

Nowadays,tax evasion is a common problem that exists in most countries.Tax non-compliance have been the focus of the discipline of public finance for many years due to its negative impact on the economy.From the perspective of trust between taxpayers and tax authorities,this paper uses laboratory experiments to investigate the effects of trust on tax compliance.First,an investment game is used to measure the trust between subjects in the experiment.Then,we examine the tax compliance and auditing decisions under different trust and information environments in a tax experiment involving both of the tax payer and the tax authority.The experimental results show that taxpayers'trust can significantly improve tax compliance and,the disclosure of the taxpayer's trust to the tax authorities increases compliance as well.At the same time,if taxpayers know that the government is trustworthy,the tax compliance will also be improved to some extent.The information of the authorities' trust in taxpayers can also increase tax compliance.In addition,the disclosure of the taxpayer's trust to the tax authorities increases audit rate,but the audit rate decreases as trust increases.Higher tax rates can lead to higher tax compliance,but high tax rates will undermine the contribution of trust to tax compliance.Through the above conclusions,this paper is devoted to provide an effective and low-cost way to increase the degree of tax compliance then tax revenues accordingly.We point out that reducing corruption and strengthening the government's positive image,means to increase the government's trustworthiness and taxpayers'trust in authority.In that case taxpayers can increase their tax voluntary compliance so as to achieve the aim of increasing tax revenues.When the trust is truly established,voluntary compliance by taxpayers will increase significantly.