Angus Young, Lawrence Lei, Brossa Wong and Betty Kwok
The purpose of this paper is to review research about China’s individual tax compliance. While empirical research in this jurisdiction is still in its infancy, the scale of the…
Abstract
Purpose
The purpose of this paper is to review research about China’s individual tax compliance. While empirical research in this jurisdiction is still in its infancy, the scale of the problem might be under estimated, or at least over looked. Comparatively, tax compliance as a subject matter has received considerable attention in developed Western economies, where the data had revealed an increasing trend of taxpayers not complying with their tax obligations. Although, this issue had not received as much attention by the Chinese government, as the world’s second largest economy and one of the most populous nations in the world, tax compliance is of critical importance to the Chinese economy and welfare of its citizens. Therefore, it is crucial that a review about China’s tax compliance research should be conducted to identify gaps in the literature.
Design/methodology/approach
This paper focuses specifically on a review of empirical research about China’s individual tax compliance. While, this work is primarily descriptive, it builds on existing research to make normative recommendations aimed at improving tax compliance in China.
Findings
This paper reaffirmed earlier findings in the literature that Confucianism influences both Chinese social and individual ethical values, any attempt to foster greater tax compliance in China should appeal to the importance of taxes as contributions to the public funding of family and community welfare. However, what was missing from previous research is that the assumption about Chinese ethical values was overly narrow. Apart from Confucianism, another Chinese philosophy known as Legalism is also influential in prompting ethical behaviour, in particular on regulatory issues. Therefore, tax compliance in China drawing on Chinese ethical values should include both incentives and disincentives to prompt individuals to comply with their tax obligations.
Research limitations/implications
The observations and recommendations put forward in the paper are principle-based solutions drawn from Chinese ethical values. Furthermore, no detailed discussions on enforcement are included, as it is beyond the scope of the paper. Hence, the recommendations will require further empirical testing and should be examined in future research.
Originality/value
This review draws attention to a subject matter in China that has been overlooked. Apart from revisiting the key and related literature on China, this paper identified a gap that had been neglected in earlier research. Legalism, a less known Chinese ethical school of thoughts, is an important to the design of tax regulations prompting individuals to comply with their tax obligations.
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Daniel Ho and Brossa Wong
To better understand the issues on compliance and ethics in taxation, this paper reviews and discusses the extant literature with a focus on individual taxpayers. As prior studies…
Abstract
Purpose
To better understand the issues on compliance and ethics in taxation, this paper reviews and discusses the extant literature with a focus on individual taxpayers. As prior studies mainly provide tax compliance and ethics information in the USA, this paper attempts to explore similar issues in a non‐US economy by articulating real‐life perspectives of tax compliance behavior in Hong Kong.
Design/methodology/approach
The first part of this study undertakes an extensive review of literature on compliance and ethics in taxation. The second part of this study provides real‐life perspectives of tax compliance behavior for individual taxpayers by examining three informal tax cases in Hong Kong.
Findings
The first major finding from literature review is that ethical beliefs could be an effective means to improve tax compliance, particularly for taxpayers with lower levels of moral development. Secondly, as tax compliance rate is higher when taxpayer has a stronger moral belief that tax evasion is not ethical, a stronger enforcement effort might have a positive overall effect on tax compliance.
Research limitations/implications
In Hong Kong, there is a lack of general ethics education for the public. The authors therefore suggest the introduction of general ethics education for all citizens in Hong Kong to enhance level of moral development in order to improve tax compliance at large.
Originality/value
The examination of the actions of taxpayers provides insightful information on tax compliance and ethics issues as prior research suggests that ethics ultimately lies in actions and hence actions should be used to study the ethical development.
Daniel Ho, Aldous Mak and Brossa Wong
Electronic business has changed the way of conducting business and raises a number of tax issues and problems internationally. The challenge is for the tax authorities to assure…
Abstract
Electronic business has changed the way of conducting business and raises a number of tax issues and problems internationally. The challenge is for the tax authorities to assure the functionality of tax, including the determination of taxable transactions, taxable quantum and which government has the right to levy tax. The Organization for Economic Co‐operation and Development has played the leading role in the study of taxation issues arising from electronic transactions. The purpose of this paper is to study the tax issues and problems raised by electronic transactions and in particular, its impact on the tax base in Hong Kong. The popular view among many tax authorities is that the current taxing rules are sufficient to deal with Internet trading and that it does not require a fundamental rewriting of international or domestic tax principles even for source‐based jurisdictions like Hong Kong. However, it is important for the Hong Kong tax authority to lead the way on the challenges and the opportunities posed by e‐business in order to assure the functionality of tax in Hong Kong.
Emerging states confront staggering shortages in adequate housing stock. In response, governments have sought various supply-based solutions to mitigate growing housing deficits…
Abstract
Purpose
Emerging states confront staggering shortages in adequate housing stock. In response, governments have sought various supply-based solutions to mitigate growing housing deficits. While many of these mass housing efforts have not produced the desired outcome, the Republic of Korea’s Two Million Housing Drive (TMHD) was a comparatively successful intervention with its implementation from 1988 to 1992. The five-year initiative exceeded its objective with the construction of over 2.1 million units – of which two-thirds were built by the private sector. The purpose of this study is to analyse Korea’s relatively effective supply-based affordable housing approach and then extrapolate best practices and lessons learned with applications for real estate markets in the developing world. Comparative understanding of the TMHD can help promote greater access to adequate housing in the developing world, especially for the many who continue to live in impoverished conditions.
Design/methodology/approach
The research uses content-based and quantitative methods to analyze the case of the TMHD in Korea toward informing improvements in corresponding supply-based housing policies and programs in developing states.
Findings
While there were challenges with the TMHD, the program repositioned Korea’s urban housing market with greater access to affordable housing in cities for the lower-income and vulnerable. The TMHD enabled the subsequent effectiveness of demand-based housing policies.
Research limitations/implications
There are research limitations in fully understanding the complex relationships between mass housing programs, economic growth and government policies. The abductive reasoning used in this case study enables in-depth analysis of the TMHD with generalizable inferences for middle-range theories with applications for emerging markets.
Practical implications
The experience of the TMHD can promote policy harmonization by helping optimize corresponding mass housing efforts in the developing world with the potential to similarly close quantitative housing deficits and expand access to adequate housing for lower-income and vulnerable households.
Social implications
Deeper understanding of the TMHD can lead to reforms of other mass housing initiatives in emerging markets to make adequate housing more accessible and economical for the benefit of underserved segments of society.
Originality/value
The Korean experience with the TMHD can inform the optimization of other similar large-scale policies and programs seeking to sustainably overcome shortfalls in adequate housing that have become all too common in the developing world.