The Social, Cultural and Economic Determinants of Filing Tax Returns: An Empirical Evidence using Microdata

Abstract

Taxes are the most crucial issue across the world, and it is also a necessary part of development for an economy. A low tax base has a major issue for economic development. The main objective of the present study is to empirically explore the determinants of tax filers by employing regression analysis. The survey method was used to collect data regarding tax filers and non-tax filers through a mixed sampling technique. The empirical results indicate that factors like education level, employment status, monthly household income, other assets possession, and knowledge about taxes emerge to be significant determinants of tax filers, with the positive signs of estimated coefficients. Moreover, variables like the total number of earners, government spending revenue, behavior related to paying taxes, and filing taxes, and attitude towards paying taxes surfaced as negatively significant determinants of tax filers. Findings of the research reveal that the government can increase the number of tax filers by widening the tax base, improving literacy levels, and enhancing the level of the documented economy which is expected to decrease tax exemption and tax evasion.