Determinants of individual taxpayers' attitudes towards income tax payment in Colombo district

Abstract

This study investigates the factors determining the individual taxpayers' attitudes towards income tax payment in Colombo district, Sri Lanka. Primary data was collected from 200 income taxpayers in the Colombo district using the convenience sampling method who are eligible to pay the income tax. The attitudes of income taxpayers towards the income tax system were considered as the dependent variable, whereas knowledge of taxpayers, simplicity of the tax system, compliance cost, morality and trust towards the government were considered as the independent variables of the study. The data were analyzed through frequency, correlation analysis and multiple regression and the findings of the frequency revealed that 83 percent of the taxpayers were males and only 17 percent of them were females. Among the taxpayers, 52.5 percent earn an income between LKR 250,000 - LKR 500,000 and only 11 percent earn an income above LKR 750,000 per month. Among the taxpayers, 35 percent are between 36 and 45 years old, followed by 34 percent at 46 and 55 years old. Nevertheless, only 1 percent of them belong to between 18 to 25 years old. Pearson correlation showed that nearly 74 percent of positive correlation exists between attitude and morality while only 22 percent of positively weak correlation exists between attitude and knowledge. The findings of the multiple regression model revealed that knowledge, fairness, morality, and trust towards government have a significant positive impact on taxpayers' attitudes while simplicity and compliance cost have insignificant in the model. Finding of the study will help policy makers to implement the suitable strategies that may improve the collection of government tax revenue in the future.