‘But everyone else is doing it’: a closer look at the occupational taxpaying culture of one business sector

Abstract

When individuals embark on their careers they not only become acculturated into their occupational sectors' day-to-day norms and practices, but also their taxpaying ones. Although the research on taxpaying cultures is still in its infancy, understanding more about taxpaying cultures could improve our understanding of the processes underlying tax compliance. To this end, this study aimed to build a detailed picture of the taxpaying culture (i.e. the norms and values) of one business sector-the hairdressing/beauty industry. Nineteen small business and self-employed hairdressers/beauticians were interviewed and a variant of Grounded theory was used to uncover the main themes that ran through the interviews as a whole. The main themes that emerged-which appear to characterize this sector's culture-include a reliance on accountants/tax advisors, the notion of an acceptable level of cash-in-hand payments, and the use of different mental accounts for different types of income. Although some of these themes have already arisen in the small business literature they have often been couched in individualistic terms. We build a case that these issues are more cultural than individual-they are tied to occupational group membership as they are socially constructed within occupational groups and are a key component of the group's taxpaying culture. Implications and directions for future research are discussed.

Tax Talk: An Exploration of Online Discussions Among Taxpayers

“…Although there has been some interest in the role of tax practitioners (Gracia and Oats 2012 ; Hite and Hasseldine 2003 ; Roberts 1998 ; Stephenson 2010 ) and taxpayer social networks (e.g. Beers et al 2013 ; Hashimzade et al 2013 ; Ashby and Webley 2008 ), more research is needed to understand the role of practitioners and of other taxpayers in taxpayer behaviour.…”

“…Although there has been some interest in the role of tax practitioners (Gracia and Oats 2012; Hite and Hasseldine 2003; Roberts 1998; Stephenson 2010) and taxpayer social networks (e.g. Beers et al 2013; Hashimzade et al 2013; Ashby and Webley 2008), more research is needed to understand the role of practitioners and of other taxpayers in taxpayer behaviour. Taxpayers are seldom concerned with audit rates and penalty levels Given the classic model of tax compliance decisions based on appraisals of audit probability and penalty levels (Allingham and Sandmo 1972), we would expect high concern in the online discussions with these variables. While audits and penalties may be of interest to taxpayers, they are usually unknown; tax authorities do not usually disclose the number of audits carried out, and while penalty levels are public, they are unknown to many taxpayers (Barham and Fox 2011).…”

Tax climate in the national press: A new tool in tax behaviour research

“…With regard to social influence, we need to keep into account both 'horizontal' and 'vertical' communication. On the one side, horizontal communication with other taxpayers (including through social networks) can affect tax compliance attitudes and behaviour, for example through the exchange of information about audits and penalties and through perceptions of social norms (Alm, McClelland, & Schulze, 1999;Ashby & Webley, 2008;Hashimzade, Myles, Page, & Rablen, 2014). Taxpayers can also actively persuade other taxpayers to comply or not to comply with tax laws (Onu & Oats, 2016).…”

Gaming the System: An Investigation of Small Business Owners’ Attitudes to Tax Avoidance, Tax Planning, and Tax Evasion

“…We also found an unexpected negative association between tax knowledge and tax evasion. One explanation for the effect may be that some of our sample had low knowledge of tax and may have honestly not realised that some scenarios listed constitute tax evasion (for instance, [60], found that there is genuine confusion among hairdressers as to whether tips should be declared as income or not). Furthermore, we found a positive association between tax knowledge and tax planning, on which we could suggest that people with higher text knowledge use their knowledge to plan their tax behaviour a priori instead of evading taxes.…”