An Investigation of Some Factors Affecting Taxpayer Non-compliance

Abstract A growing concern in almost every nation today is the amount of ‘tax gap’ (i.e. the difference between the taxes actually paid and what would be paid if all taxpayers filed complete and accurate returns and paid all the taxes they owe). Because the tax gap is often quite substantial, the problem of taxpayer non-compliance is one that requires careful scrutiny. This article addresses the problem of taxpayer non-compliance in an international context. The article briefly presents three of the main factors said to affect taxpayer non-compliance (rate structure, tax complexity, and control system). Next some estimates of the extent of non-compliance in seven countries (Sweden, Japan, Netherlands, United Kingdom, France, Italy and the United States) are reported and an examination made of the three factors in each country's tax system. It concludes with a discussion of how each factor analysed affects taxpayer compliance.