Analysis of Procedural and Retributive Justice in Tax Compliance

Abstract

Todate, tax research has tended to focus on tax penalties rather thantheir retributive justices and procedural justices of systems imposingtax penalties. This article focuses on retributive justices and proceduraljustice in tax compliance literature.The article examines whether or not charging corporate incometax penalties, which are perceived retributively justice encourage taxcompliance. Also it investigates whether or not implementingprocedural justice in imposing corporate income tax penalties increasescompliance and moderates the relationship between tax complianceand retributive justice.Data were collected using survey method to solicit responses from257 Small and Medium Enterprises [SMEs] taxpayers in Tanzaniaabout their perceptions over retributive justice of corporate incometax penalties for not keeping complete records as well as payingtaxes on time, and likely impacts of the penalties on tax compliance.Also the survey collected data on respondents ' perception onprocedural justice in the process of imposing tax penalties.  Results from the study revealed that both perception on retributiveand procedural justices are significanly positively correlated with taxcompliance.Also the perception on procedural justice might moderatethe association between retributive justice and tax compliance.The retributive and procedural justices fared significant better inincreasing tax compliance and the procedural justices have amoderation effect on the relationship between tax compliance andretributive justice. Therefore, it is recommended that tax authoritiesshould strive to improve retributive justice perception on their taxpenalties and procedural justice of systems involved in delivering taxpenalties.Keywords: Procedural justice, Retributive justice, SMEs Taxavoidance, Tax compliance and Tax evasion.