Do tax compliance costs mediate the relationship between the complexity of tax structure and fairness perceptions? Evidence from manufacturers

The phenomenon of tax fairness has been researched in the past with a host of dimensions and determinants. Tax fairness and attitudes towards compliance have majorly been affected by structural factors of taxation, of which a major component is the perceived complexity of the tax system. It has also been revealed by extant literature that compliance costs of taxation are critical indicators of how complex the taxation structure is in an economic system. At the outset, it becomes imperative to understand if the compliance costs of taxation play a role in serving as a causal link between tax compliance costs and fairness perceptions. The study employs a survey approach through a structured questionnaire to elicit responses on tax complexity, compliance costs and tax fairness perceptions. Structural equation modeling shows that there is a significant indirect effect of tax complexity on fairness perceptions through the mediating role of tax compliance costs.