The interplay between power and trust in stimulating voluntary deference: testing the “Slippery Slope Framework” of tax compliance among taxpayers in Addis Ababa City administration, Ethiopia

Abstract

This study examined the interplay between trust in and the power of the tax authority in shaping voluntary tax compliance. The study tested the “slippery slope framework” of tax compliance with survey data collected from taxpayers in Addis Ababa city administration. We hypothesized that the effect of cognition-based trust on voluntary tax compliance is moderated by the legitimate power of the tax authority. We further conjectured that coercive power encourages enforced tax compliance while cognition-based trust predicts voluntary tax compliance. The respondents of the study were selected based on convenient sampling, i.e., distributing the questionnaire to each of the three categories of taxpayers who visited the nine offices of the Addis Ababa City Administration Tax Authority as well as their commercial premises. The sample size of the study was 384. To test our theories, we used hierarchical regression and PROCESS MACRO analysis. As evidenced by our findings, the hypotheses were supported: coercive power significantly predicted enforced tax compliance, cognition-based trust (as opposed to affect-based trust) significantly predicted voluntary tax compliance, and, more importantly, legitimate power moderated the effect of cognition-based trust on voluntary tax compliance. The results fully support the proposition of the “slippery slope framework” replicating the empirical work testing the framework in the Western nations. We admit that some inherent limitations of a survey study may limit the generalizability of our findings to other settings.