The Slippery Slope Framework of Tax Compliance in The Gambia - Modelling Power and Trust Dynamics

Abstract

Recent studies on tax compliance have focused on testing the classical predictions of the Slippery Slope Framework (SSF). This study extends the SSF by exploring the economic and behavioural factors of compliance associated with power and trust. This study therefore is dedicated to fully examining these factors and the interplay between power and trust as the two main determinants of tax compliance, a case of self-employed taxpayers in the Gambia. The study begins by offering a comprehensive analysis of trends of tax performance in the Gambia and the theoretical foundations for understanding taxpayer behaviour. In order to fully understand the behavioural aspects of the SSF, the study further proposed a microeconomic model of tax evasion through the expected utility theory. The study aims at examining how the economic and bevavioural factors influence the perceived power of the tax authority, trust in the authority, the influence of trust on voluntary compliance, the influence of power on enforced compliance, and the interplay between power and trust on overall tax compliance. While many empirical evidence are consistent with the classic prediction that trust leads to voluntary compliance, there is no agreement in recent literature on the interplay between trust and power on overall compliance. The expected utility theory predicts the taxpayer’s behaviour under random audits and the conditions leading to full evasion and full compliance given certain audit probabilities. The study also proposes to test the microeconomic predictions of the marginal effects of the EUT parameters on compliance.