Impact of Social Norms on Tax Morale in Malaysia: Empirical Evidence Through Structural Equation Modelling

Purpose: This study examines the influence of social norms on tax morale among individual taxpayers in Malaysia by applying the multidimensional model of the theory of Social Norms. Design/methodology/approach: The study develops the research instrument by including hypothetical tax scenarios with specific items. Using the purposive sampling method, the online and paper surveys were distributed across all states in Malaysia, resulting in 319 usable responses from salaried individual taxpayers. The partial least square-structural equation modelling (PLS-SEM) tool was used to analyse the data collected. Findings: The results show that social norms positively influence tax morale. The findings provide evidence to support the hypothesis related to personal, descriptive, injunctive, and subjective norms. Social norms are powerful determinants of tax morale that increase social awareness and influence social interactions and dynamics for taxpayers in making compliance decisions. Research limitations/implications: The scope of the study is exclusively focused on non-economic intervening variables; thus, only a social perspective is adapted to explain the reasons why people pay taxes. Practical implications: The study expects to benefit many stakeholders, including researchers, policymakers, practitioners, and the taxpayers' community, by enhancing tax morale through a multifaceted approach. Governments can create a more efficient, fair, and resilient tax system by understanding and fostering tax morale. Originality/value: The study extends the literature on social norms in the context of tax morale, while prior literature only examined the relationships between social norms and tax compliance. Furthermore, this study empirically tested the valid and reliable social norms dimensions, thus modelling the direct role that examined their impact on tax morale. This study evaluates social norms as a higher-order construct reflected by its multidimensionality. Hence, this study enriches the limited literature on social norms and tax morale and demonstrates that each dimension of social norms is interrelated. Keywords: Social Norms, Personal Norms, Descriptive Norms, Tax Morale, Social Psychology
Introduction Tax morale is a dynamic and multifaceted concept which has garnered worldwide attention over the past decade. It has been widely studied and differently defined by many scholars as [...]