Tax evasion attitude and taxpayers’ perception of government legitimacy: evidence from Southern Ethiopia

Tax evasion, a global concern, undermines government revenue, public services, and societal trust. It occurs when taxpayers deliberately avoid their tax obligations. This study primarily explores the link between government legitimacy and tax evasion decisions in Ethiopia. Aside from bridging the knowledge gap in tax evasion, the findings are instrumental for policymakers to develop more effective approaches to tax collection and promote a culture of voluntary tax compliance in Ethiopia. Using survey data from 768 respondents across five administrative zones in Southern Ethiopia. The research examines how taxpayers' perceptions of government legitimacy influence their attitudes toward tax evasion. Methodologically, the study employed one-way ANOVA and a logistic regression model to analyze the collected data. The findings reveal a significant negative association between government legitimacy and tax evasion. Taxpayers who view the government as legitimate are less likely to consider evasion. However, other factors also play a role. The study identifies age, perceived corruption, penalty severity, and tax system complexity as positively influencing tax evasion attitudes, while education level has a negative effect. Based on these findings, the study recommends strategies to improve government legitimacy and strengthen tax compliance. these include promoting accountable and transparent governance, enhancing public service delivery, simplifying the tax system, increasing penalties for evasion, and tackling corruption. By addressing these aspects, Ethiopia can foster trust in institutions and ultimately reduce tax evasion.