Abstract:
Tax compliance has been examined from various perspectives by researchers since
its impact on the economy is vital. This study aims to explore the relationship between
the income and the taxpayer's compliance behavior using the assumptions in the
Slippery-Slope Framework. The research focuses only on the small and medium level
business community in Sri Lanka. The study empirically examines how a taxpayer's
income influences tax compliance decisions with the perception of trust in the tax
regime's authority and power. A self-administered questionnaire has been distributed
to obtain the information needed from the target group and received 408 responses.
Kendall's tau-b and Spearman's correlation coefficients were used to measuring the
association's direction between two variables. The findings suggest that voluntary
compliance has a positive connection, while enforced compliance shows a negative
association with the taxpayer's income level. Also, the results prove that the level of
income is a determinant of tax compliance. Besides, it has been established that the
tax authority should take adequate measures to review the strategies developed to
implement tax policy. This Research expects to give an insight into the operations of
the revenue authority and decisions taken by policymakers and academics to explore
the factors that encourage tax compliance.
