CHAPTER 6 THE IMPACT OF EFD USE ON AUDIT EFFECTIVENESS,
6.4 Fairness in tax processes
6.4.1 Demographic variables and tax process fairness
This subsection analysed the relationship between demographic variables and the perceived fairness in the tax process. Table 6-10 summarised all results of the categorical relationship between demographic variables and the perceived fairness of the tax process.
The first demographic variable studied is the gender of respondents. First, the analysis used the One Way ANOVA to determine if there is significant categorical relationship between gender and the perceived procedure fairness. According to Table 6-10, the One Way ANOVA p-value is 0.638, which is greater than the threshold. The analysis suggests the
14.3
24.7
29.7
23.7
7.5
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
Very fair Fair Moderate Unfair Very unfair
Percent
Fairness of tax procedures
lack of a significant categorical relationship between gender and the perceived fairness in the tax process.
Furthermore, the study used the ordinal regression model to determine the significance of the impact of gender category on the perceived fairness. Results presented in Table 6-11 suggested the model-fitting information p-value as 0.574. Accordingly, the Nagelkerke r- square value is 0.001 (0.1%), which is very low. Because of this, the parameter estimate did not suggest any impact exerted by gender on the perceived fairness of tax procedures.
In other words, the two gender groups had an equivalent perception of the fairness in tax procedures. The historical affiliation of economic resources with males, as reported by Newman and Nokhu (2018), has not impacted the position of gender on how it impacts the perceived fairness of tax procedures.
Table 6-10: Demographic variables and tax process fairness - One Way ANOVA extracts Input variable Descriptive information One Way
ANOVA P- Value
Scale Mean Freq.
Age 18-30 2.70 98 0.013
31-40 3.15 96
41-50 2.76 68
51 and above 2.41 17
Overall 2.85 279
Gender Female 2.88 173 0.638
Male 2.81 106
Overall 2.85 279
Education Primary Education 2.76 79 0.440
Secondary Education
2.77 90
Certificate or Diploma
3.01 88
Degree and above 2.91 22
Overall 2.85 279
Business experience 2 years and below 2.88 148 0.058 Between 3 and 5
years
2.63 78
6 years and above 3.11 53
Overall 2.85 279
Source: (Author’s Design, 2020)
Secondly, the study analysed the relationship between the age of respondents and the perceived fairness in tax procedures. The result of the One Way ANOVA presented in Table 6-10 suggested the p-value as 0.013. Based on these results a significant categorical relationship between the age of respondents and the perceived fairness of tax procedures is approved. On the other hand, the study determined whether the age category offered a significant influence on the level of the perceived fairness of tax procedures. Results presented in Table 6-11 suggested that the model fits to the proposed relationship, because the model-fitting information p-value was 0.006. Moreover, the reported Nagelkerke r- square value was 0.045 or 4.5% of influence. On the other hand, after setting the age above 51 years as the reference value, only those aged between 31 and 40 years showed a significant difference. Their observed p-value was 0.004. Based on the One Way ANOVA presented in Table 6-10, their observed mean is above 3 (moderate). This observation is against the rest of the observed mean, which are observed to be less than three (3). The later mean(s) are more inclined to a fair tax process. The position of these results suggests that the age of respondents of respondents can be used to predict the perceived fairness of tax procedures.
Table 6-11: Demographic variables and tax process fairness – Ordinal regression extracts Input
variable
Element of measurement Value Parameter estimates for respective input variables
Input variable scale P-value Gender Model-fitting information p-
value
0.574 Female 0.571
Nagelkerke Pseudo r-square 0.001 Male Ref. value
Education Model-fitting information p- 0.455 Primary 0.511
value Secondary 0.524 Nagelkerke Pseudo r-square 0.010 Certificate/ Diploma 0.826
Degree or above Ref. value Business
experience
Model-fitting information p- value
0.053 2 years and below 0.163 Between 3 and 5 years 0.016 Nagelkerke Pseudo r-square 0.022 6 years and above Ref. value Age Model-fitting information p-
value
0.006 18-30 years 0.159
31-40 years 0.004
Nagelkerke Pseudo r-square 0.045 41-50 years 0.108 Above 51 years Ref. value Source: (Author’s Design, 2020)
The third demographic variable studied by this study is the level of education. The study analysed the relationship between the level of education of respondents and the perceived fairness in tax processes, to determine whether the significant categorical relationship existed. Based on Table 6-10, the result of the One Way ANOVA analysis suggested the p- value which is greater than 0.05, the p-value was 0.440. The observed result suggested no significant categorical relationship between the level of education and the perceived level of fairness in tax processes.
Accordingly, the study used the ordinal regression to determine the significance of the impact of the level of education on the perceived fairness in tax procedures. Results of the ordinal regression analysis in Table 6-11 suggested the model-fitting information exceeding the threshold; the p-value was 0.445. Other values include the Nagelkerke r- square value of 0.010, and parameter estimates across the scale, which are above 0.05.
Given this information, the study confirmed that the level of education is not a good determinant of the perceived fairness. This is because there is a great similarity in the response of taxpayers toward the perceived fairness of procedures, regardless of their level of education.
The last demographic element discussed was business experience. In testing the presence of the categorical relationship between business experience and the perceived fairness in procedures, the result of the One Way ANOVA suggested that the p-value is greater than
0.05; the observed value is 0.058. Therefore, there is no significant categorical relationship between business experience and the perceived fairness in tax processes. On the other hand, the study used ordinal regression to determine whether business experience could be used to predict the perceived fairness of procedures. The observed model-fitting information was slightly greater than 0.05; its value was 0.053. Further to this, the study observed the Nagelkerke r-square value to be 0.022; the value was small. After setting business experience above 6 years as a reference value, the group of respondents with business experience of between 3 and 5 years is the only one which showed a significant difference from the reference value. The observed p-value was 0.004. The results of the One Way ANOVA showed the p-value for this category to have a slightly lesser value than the rest. However, the study ignores this position because the mean is still inclined to a moderate position. Therefore, the level of education is not a good predictive variable for the perceived fairness of tax procedures.