Sosyal Bilimler Dergisi / The Journal of Social Science

Transcription

1 ISSN: Sosyal Bilimler Dergisi / The Journal of Social Science Yıl: 5, Sayı: 26, Ağustos 2018, s Ferdi Asım HELLAÇ Certified Public Accountant, Zonguldak, ferdi_asim@hellac.com THE EFFECT OF TURKISH INDIVIDUAL TAXPAYERS DEMOGRAPH- IC CHARACTERISTICS ON TAX-RELATED ATTITUDES AND BEHAV- IOR FROM THE VIEWPOINT OF AN CERTIFIED PUBLIC ACCOUNTANT 1 Abstract Taxpayers' attitudes and behaviors towards taxation affect demographic factors. This research was designed to investigate the effect of the tax-based income taxpayers' demographics on the attitudes and behaviors towards taxation. In this study with 350 participants in the questionnaire easy sample used Zonguldak 2 it has been made in Turkey. The analysis results show that the demographics of the taxpayers affected their attitudes towards taxation and their behavior. Accordingly, this study reveals the importance of the effect of the demographical features of the taxpayers on the attitudes and behaviors towards taxation. 1 This study is based on the Master s Thesis titled Tax, Reactions to Tax, the Reactions of Income Tax Payers in Zonguldak to Tax (Beykent University, Institute of Social Sciences, 2017). 2 Zonguldak is a province of Turkey. Situated on the coast of the Black Sea, it has a population of 597,524. Its port plays an important role in maritime trade between Turkey and other countries surrounding the Black Sea. Moreover, it has the largest hard coal mines in Turkey. As it is one of the provinces with a high potential for underground resources, it is called the mining city. In addition to hard coal, Zonguldak has aluminum (bauxite), iron, manganese, barite, dolomite, limestone, quartzite and slate clay reserves. Among them, manganese, limestone and slate clay are actively extracted. Turkey s largest flat steel, iron-steel plants and coking coal reserves are also in Zonguldak. The contribution of coking coal and flat iron and steel to the country s economy is crucial. Additionally, there are many industrialists in Zonguldak, who invest in various sub-sectors of the manufacturing industry (mining, iron and steel, industry based on soil and rock resources, ship/yacht building, food, textiles, construction, chemistry, paper, furniture, automotive side industry, machinery, energy, etc.). Zonguldak contributed significantly to the central administration budget in Its income-expense coverage ratio is 129%. This is somewhat above the average for Turkey. Zonguldak is one of the provinces that generates revenues higher than its expenses. As of end-2016, it ranks 18 th among 81 provinces in terms of its contribution to taxes in the government budget.

2 Keywords: Tax Reversals, Individual Taxpayers, Demographic MALİ MÜŞAVİR BAKIŞIYLA TÜRK BİREYSEL VERGİ MÜKELLE- FLERİNİN DEMOGRAFİK ÖZELLİKLERİNİN VERGİYE KARŞI TU- TUM VE DAVRANIŞLARINA ETKİSİ Özet Mükelleflerin vergiye karşı tutum ve davranışları demografik faktörlerden etkilemektedir. Bu araştırma, beyana dayalı gelir vergisi mükelleflerinin demografik özelliklerinin vergiye karşı tutum ve davranışları üzerindeki etkisini araştırmak üzere kurgulanmıştır. Anket formunun kolayda örneklem kullanıldığı bu araştırma 350 katılımcı ile Zonguldak ili Türkiye de yapılmıştır. Yapılan analiz sonuçları mükelleflerin demografik özelliklerinin vergiye karşı tutum ve davranışlarını etkilediğini göstermektedir. Bundan hareketle bu çalışma mükelleflerin demografik özelliklerinin vergiye karşı tutum ve davranışlarına etkisinin önemini ortaya koymaktadır. Anahtar Kelimeler: Vergiye Karşı Tepkiler, Bireysel Vergi Mükellefleri, Demografik Özellikler 1. Introduction The way taxes imposed by the government are perceived by taxpayers is crucial for the efficiency and effectiveness of the tax system. The effectiveness of the tax system is affected by compliance with tax-related rules and spontaneous fulfillment of tax-related liabilities by taxpayers. The voluntary tax compliance by taxpayers depends on their tax perception and tax awareness. From the viewpoint of taxpayers, taxes are gratuitous and mandatory payments. In this context, the way taxes imposed by the government are perceived by taxpayers and the meaning it has in their minds define the tax perception of taxpayers and their reactions to tax. Being accountants, we deal with the resolution of issues on the subject and have explored the demographic characteristics of reactions to tax and conducted this study in an attempt to inform the parties involved and our colleagues regarding the resolution of issues, based on the results obtained. In this context, the way income tax payers perceive taxes and their tax-related attitude and behavior were selected as the subject of the study in an effort to determine whether the way they perceive and react to taxes varies with respect to their demographic characteristics and present the results. The study is intended to identify the tax perceptions of income tax payers in Zonguldak 3 and their attitude and behavior regarding tax awareness, tax equity, tax burden, documentation, tax evasion and penalties, and tax audits, and to investigate the role that their demographic factors play in their attitude and behavior. When measuring taxpayers perceptions and reactions to tax, presenting their tax perceptions and exploring how the imposition of taxes is perceived by taxpayers, their demographic characteristics are crucial. This is because demographic characteristics have a significant effect on designing social rules and behavior of individuals. From this perspective, the individual characteristics of taxpayers also play a significant role in their tax compliance and reactions to tax. To create an effective and efficient taxation system, it is essential to take into account the taxpayers perceptions and reactions to tax liabilities Real property income tax payers, security income tax payers and wage earners are excluded.

3 2. Research Methodology This study was conducted to measure the tax-related attitude, behavior and reactions of income tax payers, and consists of three stages. In the first stage, a questionnaire form was created to learn about the reactions of taxpayers to tax. For this purpose, face-to-face interviews were conducted with income tax payers to gather information. Using the information gathered from the literature and face-to-face interviews with taxpayers, the questionnaire form was developed. The questionnaire titled Questionnaire on Reactions of Income Tax Payers in Zonguldak to Taxes consisted of 45 questions. In the second stage, the questionnaire forms were distributed to income tax payers randomly selected and visited in the provincial center and counties of Zonguldak. In the third stage, the data obtained were analyzed. Survey method was preferred as data acquisition technique in the research. Table 1 below contains the study universe, the minimum number of samples and the study sample. Table 1: Working universe and number of sampling Operating income taxpayer taxpayers Working universe 4 (Person) Minimum instance 5 (Person) Working example (Person) Headquarters and regions Total taxpayers have been applied with random sampling technique calculated that the sample volume should be at least 350 people, moving from the sum of income taxpayers based on Zonguldak province. It is a controversial issue whether the answers given by taxpayers to the questions created by taking into account tax-related attitude and behavior in various dimensions reflect the truth. However, since the questionnaire included questions that measure taxpayers perceptions of and reactions to tax, rather than questions related to tax evasion, the answers given are likely to reflect the truth. All data obtained from the respondents were subjected to analysis using SPSS Prior to moving on to any statistical process using the data, they were checked for errors and whether they were within the limits set for the purpose of this research. Then, statistical analyses were conducted on the research data. To summarize the demographic characteristics of taxpayers in the study group, the frequency (f) and percentages (%) of variables were calculated in these statistical analyses. Mean ( X ) and standard deviation (sd) values of the scores given by respondents to 20 Likert-type scale items developed were calculated to investigate the levels of tax-related perceptions/reactions of taxpayers. Chi-square analysis was conducted to find out whether there was a relationship between the demographic characteristics of taxpayers and their tax perceptions (as all the variables were categorical). An independent samples t-test was conducted to find out whether the tax-related perceptions (scores) of taxpayers varied significantly, Information on the working universe was obtained from the Zonguldak Tax Office. 5 To determine the minimum number of samples, Büyüköztürk, Şenel (2007). Sosyal Bilimler İçin Veri Analizi El Kitabı, Ankara: Pagem Yayınları

4 according to gender and the form in which the income is determined. Non-parametric Kruskal- Wallis test was conducted to determine whether tax-related perceptions (scores) of taxpayers varied significantly depending on their age, educational level, occupation, duration of taxpayer status, and the tax brackets they were in (as the assumption of normality was not met). Where a significant variation was found, post-hoc Mann-Whitney test was conducted to find out which groups of variables were different. The level of significance was assumed to be 0.05 in all statistical calculations. When the level of significance was found to be lower than 0.05 (p<0.05), the variations and relationships between the groups (categories) of independent variables were considered significant, and the results were evaluated accordingly. 3. Data Analysis 3.1 Demographic Characteristics Demographic characteristics of the income tax payers in Zonguldak that participated in the research are summarized in Table 2. Table 2: Frequency (f) and percentage (%) distribution of the study group by demographic characteristics Variable Group f % % % Valid Cumulative Gender Female Male Age and above Marital status Married Single Divorced Educational level Elementary (primary and secondary school) High school Bachelor s degree Master s - PhD Occupation Tradesman Industrialist

5 Table 2: Frequency (f) and percentage (%) distribution of the study group by demographic characteristics Variable Group f % Duration of taxpayer status % Valid % Cumulative Self-employed Artisans Contractor years years years years years and above Tax Procedures Real Taxation Procedure Basic Taxation Procedure Tax base for % tax bracket % tax bracket % tax bracket % tax bracket ,001 TRY and above No tax liability (reporting loss) % of the respondents are female and 87.7% are male. A majority of the respondents are between 26 and 55 years of age (39.7% are between 26 and 40 years of age, whereas 42.0% are between years of age). 80.0% of the respondents are married, whereas 14.0% are single and the remaining 6.0% are divorced. As to the educational level of the respondents, the majority (53.7%) have high school diploma. The smallest educational level group is those that have a master s or PhD degree (6.0%). As to the occupational distribution of the respondents, 36.3% are artisans, 1.7% are industrialist, 19.1% are self-employed, 32.9% are artisans and the remaining 10.0% are contractors. The largest group among the respondents in terms of the duration of taxpayer status is those that have been taxpayers for 6-10 years (47.7%). The smallest group is those that have been taxpayers for 0-2 years (4.0%). 86.0% of the respondents are taxed based on the real taxation procedure 6, whereas 14.0% are taxed based on the basic taxation pro Taxation through the real procedure: Those that do not meet the general and specific requirements for taxation through the simple procedure set forth in Articles 47 and 48 of the Income Tax Law (ITL) and the real person taxpayers that are listed in the section titled limits of the simple procedure of Article 51 of the ITL are taxed through the real procedure.

6 cedure 7. Finally, the largest group (30.6%) among the respondents in terms of tax bases (brackets) for 2015 is those that are in the 15% tax bracket, whereas the smallest group (1.7%) is those that have a tax base equal to or above 110,001 TRY. 3.2 Perception Of Taxes As seen in Table 3 below, tax is mostly perceived as a duty that must be fulfilled by 41.1% of the respondents. It is followed by a mandatory payment (20.3%), a payment for public services (16.9%), a financial burden (13.7%), and a factor that prevents entrepreneurship (8.0%), respectively. Table 3: Frequency and percentage distribution of answers given by taxpayers to questions on perception of tax Variable Option f % What do you think tax means? A payment for public services A mandatory payment A duty that must be fulfilled A financial burden A factor that prevents entrepreneurship A chi-square test was conducted to determine whether there was a significant relationship between the perception of tax and age of the respondents, and no significant relationship was found between the two variables (p>0.05). In other words, the taxpayers perception of tax does not vary according to their age, and taxpayers of different ages have a similar perception of tax. A chi-square test was conducted to determine whether there was a significant relationship between the perception of tax and educational level of the respondents, and a significant relationship was found between the two variables (X 2 =70.44 and p<0.001). According to the residual analysis conducted to determine which groups of taxpayers have a different level of tax perception (and to identify the source of the difference); Those that have an elementary school diploma perceive tax more as a payment for public services and a mandatory payment than those with a bachelor s degree. Those that have a bachelor s degree and master s/phd degree perceive tax more as a duty that must be fulfilled when compared with those that have an elementary and high school diploma Taxation through the basic procedure: Those that meet the general and specific requirements for taxation through the simple procedure set forth in Articles 47 and 48 of the ITL and those that are not listed in the section titled limits of the simple procedure of Article 51 of the ITL are taxed through the basic procedure. Taxpayers taxed through the basic procedure are provided with some conveniences that are not provided to those taxed through the real procedure. These conveniences include no obligation to keep books, no stoppage, no obligation to submit brief tax return, no obligation to submit provisional tax return, no obligation to pay provisional tax, VAT exemption for delivery and services, disregarding of the purchase and sale of depreciable economic assets, an annual discount of 8,000 TRY to business income, and possibility to enjoy discounts for the disabled.

7 3.3 Perceptions Regarding Tax Awareness Chi-square tests were conducted to determine whether there was a relationship among tax awareness of the respondents and their age and educational level. Results are given in Table 4 below. Table 4: Frequency and percentage distribution of answers given by taxpayers to questions on tax awareness Variable Option f % How can tax awareness be raised in our country? By eliminating tax inequity By education and training By reducing tax rates By preventing lavish public expenditures By increasing per capita income Where do you learn about the tax legislation and relevant developments? From the press From my financial adviser or accountant My magazine subscriptions I do not monitor the legislation Other According to the answers given to the multiple-choice questions on how the tax awareness can be raised in our country in the table above, the respondents think that education and training is the most effective way of doing it (84.6%). It is followed by the option elimination of tax inequity (71.4%). Following these two options, the respondents chose increasing per capita income (33.4%), reducing tax rates (30.6%) and prevention of lavish public expenditures (21.7%) as the most effective ways of raising tax awareness. When the respondents were asked where they learned about the tax legislation and developments, a large majority (83.4%) of them reported that they learned them from their financial adviser or accountant. It is followed by the media (8.3%), magazines to which they subscribe (3.4%) and other sources (0.9%). Four per cent of the respondents stated that they never monitored the legislation. Chi-square tests were conducted to determine whether there was a relationship between the tax awareness of the respondents, their age and educational level. The results are given below. A chi-square test was also conducted to determine whether there was a significant relationship between the answers given by the respondents to the options on raising of tax awareness and their age. A significant relationship was found only between education, among the five options for raising of tax awareness, and age (X 2 =30.36 and p<0.001). In other words, the idea/perception that the tax awareness of taxpayers can be raised by education varies according to age. According to the residual analysis carried out following the chi-square test, respondents 419

8 between the ages of 41 and 55 concur with the notion that tax awareness can be raised by education more than the other respondents. A significant relationship was found between the source from which respondents learn about the tax legislation and developments and their age (X 2 =30.08 and p<0.05). In other words, the source from which taxpayers learn about the tax legislation and developments varies according to age. According to the residual analysis carried out following the chi-square test, respondents between the ages of 18 and 25 monitor the legislation at a lower rate than the other respondents. In other words, the percentage of those stating that they do not monitor the legislation is higher in the age group. A chi-square test was conducted to determine whether there was a significant relationship between the answers given by the respondents to the options on raising of tax awareness and their educational level. A significant relationship was found only between the reduction of tax rates and educational level, among the five options for raising of tax awareness (X 2 =7.88 and p<0.05). In other words, the idea/perception that the tax awareness of taxpayers can be raised by reducing tax rates varies according to the level of education. According to the residual analysis carried out following the chi-square test, the respondents that have an elementary school diploma, high school diploma and bachelor s degree believe that the awareness of tax can be increased by reducing tax rates, whereas the respondents with a master s/phd degree do not agree with this idea. A significant relationship was found between the source from which respondents learn about the tax legislation and developments and their educational level (X 2 = and p<0.001). In other words, the source from which taxpayers learn about the tax legislation and developments varies according to level of education. According to the residual analysis carried out following the chi-square test, the respondents with a master s/phd degree learn about the tax legislation mostly from the media, whereas the respondents that have an elementary school diploma and high school diploma learn about the tax legislation mostly from their financial adviser or accountant. It is clear that in societies where tax awareness is not fully internalized, financial advisers and accountants play an important role in keeping bookkeeping activities in order and ensuring regular tax accrual Perceptions Regarding Tax Equity The respondents level of perception regarding tax equity was investigated by three questions. Chi-square tests were then conducted to determine whether there was a significant relationship between their answers and two of their demographic characteristics, namely, educational level and the form in which the income is determined. First, the general perception of the respondents regarding tax equity was explored as shown in Table 5 below, and then tests were conducted to find out whether there was a significant relationship between their answers and educational level and the form in which the income is determined.

9 Table 5: Frequency and percentage distribution of answers given by taxpayers to questions tax equity Variable Option f % Do you believe that taxes imposed in our country are equitable? If taxes are inequitable, what do you think the reason is? Equitable Inequitable Very inequitable Because tax evasion is common Because tax penalties are inadequate Because the government frequently offers tax amnesty Because tax laws are inadequate Because tax awareness is lacking What do you think about tax amnesties? Honest taxpayers are being punished They undermine tax equity Very beneficial They undermine people s confidence in the government No positive or negative impact When they were asked whether the taxes imposed in our country were equitable or not, a great majority of the respondents (74.3%) answered, very inequitable. 22.9% of the respondents stated that taxes were inequitable, whereas only 2.9% answered, equitable. When the respondents were asked what the reason was for tax inequity (multiple choice question), they chose most of the options almost equally, but the frequent offering of tax amnesties was the most popular option, chosen by 64.9% of the respondents. The least important reason they chose was the inadequacy of tax laws, an option chosen by 48.3% of the respondents. As a large portion of the respondents do not monitor the imposition of taxes and mostly assign their financial advisers and accountants to do this job, they stated that they did not consider tax laws to be inadequate in this area, where they did not have adequate information. Even so, Turkish tax legislation is complicated. It is known that financial advisers and accountants analyze this complex legislation on behalf of taxpayers and ensure that the provisions are enforced. When the respondents were asked about their opinions on tax amnesties, 40.9% answered that they undermined tax equity, 37.7% that they punished honest taxpayers, 14.3% that they undermined people s confidence in the government, 4.9% that they had no positive or negative impact, and the remaining 2.3% that they were very beneficial. Chi-square tests were conducted to determine whether there was a relationship between the respondents perceptions regarding 421

10 tax equity and their educational level and the form in which the income is determined. The results are given below. A chi-square test was conducted to determine whether there was a significant relationship between the respondents perception that the taxes imposed were equitable and their educational level, and a significant relationship was not found between the two variables (p>0.05). In other words, the respondents perception that the taxes imposed are equitable does not vary according to their educational level, or the perceptions of the respondents with different levels of educational that taxes are equitable are similar. A chi-square test was conducted to determine whether there was a significant relationship between the answers given by the respondents to the question on the reason underlying inequitable taxes and their educational level. There is no significant relationship between the educational level of taxpayers and their choice of the options tax evasion is common, tax penalties are inadequate and tax amnesties are offered frequently (p>0.05); that is, taxpayers have similar opinions on this subject, regardless of their educational level. Nevertheless, a significant relationship was found between the taxpayers educational level and perceptions regarding inadequacy of tax laws (X 2 =17.89 and p<0.001). According to the residual analysis carried out following the chi-square test, those that have a bachelor s and master s/phd degrees think that tax laws are inadequate, whereas those have an elementary school diploma do not agree with this. A significant relationship was found between the taxpayers educational level and perceptions regarding failure to internalize tax awareness (X 2 =10.35 and p<0.05). In relation to the residual analysis carried out following the chi-square test, fewer taxpayers with an elementary school diploma agree with the opinion that tax awareness has not been internalized than other taxpayers (those with a high school diploma, bachelor s and master s/phd degree) do. 422 A significant relationship was found between the taxpayers educational level and opinions regarding tax amnesties (X 2 =38.25 and p<0.001). According to the residual analysis carried out following the chi-square test, it was found that more taxpayers with a bachelor s and a master s/phd degree agreed with the statement that tax amnesties undermine tax equity than those with a high school diploma, whereas more taxpayers with a high school diploma agreed with the statement that honest taxpayers are being punished than those that have a bachelor s degree. A significant relationship was found between the taxation procedures for taxpayers (form of income determination) and their perceptions on whether the taxes imposed in our country were equitable (X 2 =26.70 and p<0.001). According to the residual analysis carried out following the chi-square test, those that are taxed through the basic procedure mostly think the taxes imposed are inequitable, whereas those that are taxed through the real taxation procedure mostly think the taxes imposed are very inequitable. A chi-square test was conducted to determine whether there was a significant relationship between the answers given by the respondents to the question on the reason underlying inequitable taxes and the taxation procedures applied to them. There was no significant relationship between the taxation procedures applied to taxpayers and their choice of the options, tax penalties are inadequate and tax amnesties are offered frequently (p>0.05). In other words, taxpayers have similar opinions on this subject, regardless of whether they are subjected to the basic or real taxation procedure. Nevertheless, a significant relationship was found between the taxation procedures for taxpayers and their perceptions regarding the prevalence of tax evasion (X 2 =5.54 and p<0.05). According to the residual analy-

11 sis carried out following the chi-square test, the taxpayers taxed through the real taxation procedure consider tax evasion a more significant reason underlying tax inequity than those taxed through the basic procedure. A significant relationship was found between the taxation procedures for taxpayers and their perceptions regarding inadequacy of tax laws (X 2 =15.23 and p<0.001). According to the residual analysis carried out following the chi-square test, the taxpayers taxed through the real taxation procedure consider inadequacy of tax laws a more significant reason underlying tax inequity than those taxed through the basic procedure. Lastly, a significant relationship was found between the taxation procedures for taxpayers and their perceptions regarding the failure to internalize tax awareness (X 2 =11.04 and p<0.05). According to the residual analysis conducted following the chi-square test, the taxpayers taxed through the real taxation procedure consider failure to internalize tax awareness a more significant reason underlying tax inequity than those taxed through the basic procedure. A significant relationship was not found between the taxation procedures for taxpayers (form of income determination) and their perceptions regarding tax amnesties (p>0.05). There is no significant difference between the opinions of taxpayers taxed through the real and basic taxation procedure, regarding tax amnesties (their opinions/perceptions are similar). 3.5 Perceptions Regarding Tax Burden The respondents level of perception regarding tax burden was investigated by the three questions given below. Chi-square tests were then conducted to determine whether there was a significant relationship between their answers and their demographic characteristics, namely, age, occupation, duration of taxpayer status, tax bracket and the form in which the income is determined. First, the general perception of the respondents regarding tax burden was explored as shown in Table 6 below, and then tests were conducted to find out whether there was a significant relationship between their answers and the above mentioned demographic characteristics. 423 Table 6: Frequency and percentage distribution of answers given by taxpayers to questions on tax burden Variable Option f % How would you rate your tax burden? Light Normal Heavy Very heavy Which of the following types of tax do you think is more burdensome? Income tax Value added tax Motor vehicles tax Special consumption tax None

12 Table 6: Frequency and percentage distribution of answers given by taxpayers to questions on tax burden Variable Option f % What kind of impact do you think reduction of tax rates will create? It will reduce tax evasion It will increase tax revenues It will increase the number of taxpayers It will decrease tax revenues When they were asked to rate their tax burden, a large portion of the respondents (57.1%) answered, heavy. 27.1% of the respondents answered very heavy. Only 1.1% of the respondents answered, light, and 14.6% answered, normal. When they were asked which type of tax was more burdensome to them, 42.3% of the respondents answered income tax. It is followed by VAT (23.7%), SCT (14.6%) and MVT (3.7%). When they were asked what kind of impact reduction of tax rates would create, 61.4% of the respondents answered that it would increase the number of taxpayers. 18.6% of the respondents answered that it would increase tax revenues, 17.1% that it would reduce tax evasion, and 2.9% that it would decrease tax revenues. Chi-square tests were conducted to determine whether there was a relationship between the respondents perceptions regarding tax burden and their age, occupation, duration of taxpayer status, tax bracket and the form in which the income is determined. The results are given below. A significant relationship was found between the taxpayers age and perceptions regarding their tax burden (X 2 =19.78 and p<0.05). According to the residual analysis carried out following the chi-square test, the taxpayers between years of age consider their tax burden normal more than other taxpayers do. Again, the taxpayers between years of age consider their tax burden very heavy more than other taxpayers do. No significant relationship was found between the age of taxpayers and their perceptions regarding which type of tax contributes more to their tax burden (p>0.05). There is no significant difference between the opinions of taxpayers of different ages regarding their tax burden (their opinions/perceptions are similar). No significant relationship was found between the age of taxpayers and their perceptions regarding the impact that reduction of tax rates would create (p>0.05). There is no significant difference between the opinions of taxpayers of different ages regarding the impact that reduction of tax rates would create (their opinions/perceptions are similar). A significant relationship was found between the taxpayers occupation and perceptions regarding their tax burden (X 2 =48.61 and p<0.001). According to the residual analysis carried out following the chi-square test, more artisans consider their tax burden to be normal than other taxpayers do. A significant relationship was found between the occupation of taxpayers and their perceptions regarding which type of tax was more burdensome to them (X 2 = and p<0.001). According to the residual analysis carried out following the chi-square test, it was found that 424

13 income tax was more burdensome to industrialists and contractors than to other taxpayers; VAT was more burdensome to the self-employed than to other taxpayers; MVT was more burdensome to artisans than to other taxpayers; SCT was more burdensome to tradesmen and contractors than to other taxpayers. No significant relationship was found between the occupation of taxpayers and their perceptions regarding the impact that reduction of tax rates would create (p>0.05). There is no significant difference between the opinions of taxpayers in different occupations regarding the impact that reduction of tax rates would create (their opinions/perceptions are similar). A significant relationship was found between the taxpayers duration of taxpayer status and perceptions regarding their tax burden (X 2 =44.26 and p<0.001). According to the residual analysis carried out following the chi-square test, it was found that Taxpayers paying income tax for 0-2 years considered their tax burden light compared to others, Taxpayers paying income tax for 0-2 and 3-5 years considered their tax burden normal compared to others, Taxpayers paying income tax for 6-10 years considered their tax burden heavy compared to others. No significant relationship was found between the duration of taxpayer status of the taxpayers and their perceptions regarding which type of tax was more burdensome to them (p>0.05).there is no significant difference between the opinions of taxpayers with different duration of taxpayer status regarding their tax burden (their opinions/perceptions are similar). A significant relationship was found between the duration of taxpayer status of taxpayers and their perceptions regarding the impact that reduction of tax rates would create (X 2 =21.64 and p<0.05). According to the residual analysis carried out following the chi-square test, more taxpayers that have been paying income tax for 21 years and longer believe that the reduction of tax rates will decrease tax revenues when compared with other taxpayers. A significant relationship was found between the taxpayers tax bracket and perceptions regarding their tax burden (X 2 =97.38 and p<0.001). According to the residual analysis carried out following the chi-square test, it was found that 425 Taxpayers that have no tax liability (reporting loss) perceived their tax burden light compared to other taxpayers, Taxpayers that have no tax liability and taxpayers in the 15% tax bracket perceived their tax burden to be normal when compared with other taxpayers, Taxpayers in the 20% tax bracket perceived their tax burden to be heavy when compared with other taxpayers, and taxpayers in the 35% tax bracket and taxpayers with a tax base above 110,000 TRY perceived their tax burden to be very heavy when compared with other taxpayers. A significant relationship was found between the tax bracket of taxpayers and their perceptions regarding which type of tax was more burdensome to them (X 2 =50.44 and p<0.001). According to the residual analysis carried out following the chi-square test, it was found that Taxpayers with no tax liability (reporting loss) perceive income tax and VAT as less burdensome compared to other taxpayers,

14 Taxpayers in the 15% tax bracket perceive MVT to be more burdensome compared with others. A significant relationship was found between the tax bracket of taxpayers and their perceptions regarding the impact that the reduction of tax rates would create (X 2 =28.15 and p<0.05). According to the residual analysis carried out following the chi-square test, it was found that Fewer taxpayers with no tax liability (reporting loss) agreed with the opinion that the reduction of tax rates would increase tax revenues than the others did. Taxpayers with no tax liability (reporting loss) agreed with the opinion that reduction of tax rates would decrease tax revenues more often than the others did. A significant relationship was found between the taxpayers the form in which the income is determined and perceptions regarding their tax burden (X 2 = and p<0.001). According to the residual analysis conducted following the chi-square test, the taxpayers taxed through the basic procedure perceived the tax burden to be light and normal compared with other taxpayers, whereas the taxpayers taxed through the real taxation procedure perceive the tax burden to be heavy and very heavy compared with the others. A significant relationship was found between the taxation procedures for taxpayers and their perceptions regarding which type of tax was more burdensome to them (X 2 =17.67 and p<0.05). According to the residual analysis carried out following the chi-square test, MVT is more burdensome to those taxpayers taxed through the basic procedure than to the taxpayers taxed through the real taxation procedure. No significant relationship was found between the taxation procedures for taxpayers and their perceptions regarding the impact that reduction of tax rates would create (p>0.05). There is no significant difference between the opinions of taxpayers taxed through the real taxation procedure and basic procedures regarding the impact that reduction of tax rates would create (their opinions/perceptions are similar) Perceptions Regarding Documentation The respondents level of perception regarding tax documentation was investigated using two questions. Chi-square tests were then conducted to determine whether there was a significant relationship between their answers and two of their demographic characteristics; namely, educational level and duration of taxpayer status. First, general perception of the respondents regarding tax documentation was explored as shown in Table 7 below, and then tests were conducted to find out whether there was a significant relationship between their answers and the above mentioned demographic characteristics. Table 7: Frequency and percentage distribution of answers given by taxpayers to questions on tax documentation Variable Option f % How often do the taxpayers from whom you purchase goods/services comply with tax documentation? Always Usually Whenever I request a document Usually not

15 Table 7: Frequency and percentage distribution of answers given by taxpayers to questions on tax documentation Variable Option f % Never None How do the taxpayers from whom you purchase goods/services create tax documents? Recording the exact transaction amount Recording an overcharged amount Recording an undercharged amount Other None When taxpayers were asked how often the taxpayers from whom they purchased goods/services comply with tax documentation, 40.0% answered always, 29.7% usually, 25.7% whenever a document is requested, 3.4% usually not, and 0.3% never. When taxpayers were asked how the taxpayers from whom they purchased goods/services created tax documents, 80.6% answered recording the exact transaction amount, 10.3% answered, recording an overcharged amount and 8.0% answered, recording an undercharged amount. Chi-square tests were conducted to determine whether there was a relationship between the respondents perceptions regarding tax documentation and their educational level and duration of taxpayer status. Results are given below. A significant relationship was found between the taxpayers educational level and the frequency at which the taxpayers from whom they purchased goods/services comply with documentation (X 2 =23.11 and p<0.05). According to the residual analysis carried out following the chi-square test, the taxpayers from whom the respondents with a high school diploma purchase goods/services usually comply with tax documentation, whereas the taxpayers from whom the respondents with an elementary school diploma purchase goods/services comply with documentation whenever a document is requested or usually do not comply with documentation. There are no significant differences with respect to other educational levels. A significant relationship was found between the taxpayers educational level and how the taxpayers from whom they purchased goods/services create tax documents (X 2 =20.39 and p<0.05). According to the residual analysis carried out following the chi-square test, the taxpayers from whom the respondents with an elementary school diploma purchase goods/services create tax documents recording an overcharged amount. No significant relationship was found between the taxpayers duration of taxpayer status and the frequency at which the taxpayers from whom they purchased goods/services comply with tax documentation (p>0.05). No significant relationship was found between the taxpayers duration of taxpayer status and how the taxpayers from whom they purchased goods/services create tax documents (p>0.05). In bookkeeping conventions, financial transactions are based on documentation. In this context, in order to be able to maintain exact and proper bookkeeping for taxpayers, taxpayers must create proper and timely tax documentation reflecting exact and real transactions. Finan- 427

16 cial advisers and accountants help taxpayers maintain proper documentation and bookkeeping, thus preventing flaws, tax evasion and losses that might arise. 3.7 Perceptions Regarding Tax Evasion and Penalties The respondents level of perception regarding tax evasion and penalties was investigated using two questions. Chi-square tests were then conducted to determine whether there was a significant relationship between their answers and their demographic characteristics; namely, educational level, occupation and their tax bracket. First, the general perception of the respondents regarding tax evasion and penalties was explored, as shown in Table 8 below, and then tests were conducted to find out whether there was a significant relationship between their answers and the above mentioned demographic characteristics. Table 8: Frequency and percentage distribution of answers given by taxpayers to questions on tax evasion and penalties Variable Option f % What kind of a penalty should be imposed on tax evaders? A fine Banning from trade Public exposure Imprisonment Shutting down the business No penalty should be imposed Which of the following methods of tax evasion do you think are more commonly used? Fake or false documentation Destruction of essential documentation No documentation or incomplete documentation Complying with documentation, but recording undercharged amounts Deferred tax payment via delayed documentation Other When the respondents were asked about how tax evasion should be punished, 66.6% answered that tax evaders should be imprisoned. It is followed by public exposure (11.1%), fine (9.4%), banning from trade (7.7%) and shutting down the business (3.7%). A total of 1.4% of the respondents believe that no penalty should be imposed. According to the respondents, the most common method (66.3%) of evading tax is creating fake or false documentation (fake invoice). This is followed by no documentation or incomplete documentation (58.0%) and deferred tax payment via delayed documentation (32.0%). Complying with tax documentation but

17 recording undercharged amounts is another common method of tax evasion stated by the respondents (26.9%). According to the respondents, the destruction of essential documentation is one of the rarest methods of tax evasion (6.0%). Chi-square tests were conducted to determine whether there was a relationship between the respondents perceptions regarding tax evasion and penalties and their educational level, occupation and tax bracket. The results are given below. A significant relationship was found between the taxpayers educational level and their opinions regarding the penalty that should be imposed on tax evaders (X 2 =40.01 and p<0.001). According to the residual analysis carried out following the chi-square test, the taxpayers with an elementary school diploma believe that fines and public exposure penalty should be imposed on tax evaders, whereas the taxpayers with a high school diploma think that tax evaders should be imprisoned. There are no significant differences with respect to other educational levels. A chi-square test was conducted to determine whether there was a significant relationship between their opinion on the most common methods of tax evasion and their educational level. There is no significant relationship between the taxpayers educational level and their choice of the options Fake or false documentation and destruction of essential documentation (p>0.05). That is, taxpayers have similar opinions on this subject, regardless of their educational level. Nevertheless, a significant relationship was found between the taxpayers educational level and perceptions regarding no documentation or incomplete documentation (X 2 =18.44 and p<0.001). According to the residual analysis carried out following the chi-square test, the taxpayers with a high school diploma believe that the most common method of tax evasion is no documentation or incomplete documentation. A significant relationship was found between the taxpayers educational level and perceptions regarding complying with tax documentation, but recording undercharged amounts (X 2 =10.62 and p<0.05). According to the residual analysis carried out following the chi-square test, the taxpayers with a bachelor s and master s/phd degree think that the most common method of tax evasion is complying with tax documentation, but recording undercharged amounts. Finally, a significant relationship was found between the taxpayers educational level and perceptions regarding tax evasion through deferred tax payment by means of delayed documentation (X 2 =8.07 and p<0.05). According to the residual analysis carried out following the chi-square test, the group that believes deferred tax payment by means of delayed documentation is a method of tax evasion the least are those with a high school diploma. Other taxpayers believe that this method is more likely to be used than do the taxpayers with a high school diploma. 429 A significant relationship was found between the taxpayers occupation and opinions regarding the penalty that should be imposed on tax evaders (X 2 =51.09 and p<0.001). According to the residual analysis carried out following the chi-square test, it is the artisans who most demand that a fine should be imposed on tax evaders, whereas industrialists think that tax evaders should be subjected to public disclosure, and the self-employed think that tax evaders should be imprisoned. A chi-square test was conducted to determine whether there was a significant relationship between the taxpayers opinion on the most common methods of tax evasion and their occupation. There is no significant relationship between the taxpayers occupation and their choice of the options destruction of essential documentation, complying with tax documentation, but recording undercharged amounts and deferred tax payment by means of delayed documentation (p>0.05). In other words, taxpayers have similar opinions on this subject, regardless of their occupation. However, a significant relationship was found between the taxpay-

18 ers occupation and perceptions regarding the use of fake or false documentation (fake invoices) to evade tax (X 2 =11.97 and p<0.05). According to the residual analysis carried out following the chi-square test, fewer artisans believe that this method is employed to evade tax than do taxpayers with other occupations. A significant relationship was found between the taxpayers occupation and perceptions regarding tax evasion through no documentation or incomplete documentation (X 2 =9.48 and p<0.05). According to the residual analysis carried out following the chi-square test, tradesmen believe that this method is employed to evade tax more frequently than do taxpayers in other occupations. A significant relationship was found between the taxpayers tax bracket and opinions regarding the penalty that should be imposed on tax evaders (X 2 =54.35 and p<0.05). According to the residual analysis carried out following the chi-square test, the taxpayers in the 15% tax bracket mostly think that fines should be imposed on tax evaders, the taxpayers with no tax liability mostly believe that tax evaders should be subjected to public exposure, the taxpayers in the 35% tax bracket mostly think that tax evaders should be imprisoned, and the taxpayers in the 20% tax bracket mostly believe that tax evaders businesses should be shut down. A chi-square test was conducted to determine whether there was a significant relationship between the taxpayers opinion on the most common methods of tax evasion and their tax bracket. There is no significant relationship between the taxpayers tax bracket and their choice of the options fake or false documentation (fake invoices), destruction of essential documentation, complying with tax documentation, but recording undercharged amounts and deferred tax payment by means of delayed documentation (p>0.05). In other words, taxpayers have similar opinions on this subject, regardless of their tax bracket. A significant relationship was found between the taxpayers tax bracket and perceptions regarding tax evasion through no documentation or incomplete documentation (X 2 =20.63 and p<0.05). According to the residual analysis carried out following the chi-square test, the taxpayers in the 20% tax bracket believe that this method is used to evade tax more frequently than do the taxpayers in other tax brackets Perceptions Regarding Tax Audits The respondents level of perception regarding tax audits was investigated by two questions. Chi-square tests were then conducted to determine whether there was a significant relationship between their answers and their demographic characteristics, namely, occupation, duration of taxpayer status, and procedure of taxation (form of income determination). First, the general perception of the respondents regarding tax audits was explored as shown in Table 9 below, and then tests were conducted to find out whether there was a significant relationship between their answers and the above mentioned demographic characteristics.