The Influence of Trust on Voluntary Tax Compliance in Tanzania: A Case of Small Enterprises
Abstract
The study assessed the influence of trust on voluntary tax compliance from a small enterprise perspective. The study integrated both institutional trust and interpersonal trust in the hypothesized model. The study employed a quantitative approach along with an explanatory research strategy. Data were collected from 100 conveniently selected owners of small enterprises using structured questionnaires. Structural Equation Modeling (SEM) was used for data analysis whereas Smart PLS 4.0 served as a statistical tool for analysis. The results from SEM indicated that institutional trust has a statistically significant influence on voluntary tax compliance among small enterprises. Also, the results indicated that institutional trust mediates the influence of interpersonal trust on voluntary tax compliance among small enterprises. Furthermore, the total effect results from SEM indicated that interpersonal trust has a significant influence on voluntary tax compliance among small enterprises. Implicitly, both institutional and interpersonal trusts play a significant role in enhancing voluntary tax compliance among small enterprises. Respondents believe that their voluntary tax compliance would increase if they had trust-based relationships with officials and tax authorities. Therefore, in order for the tax authority to enhance voluntary compliance behaviour, it is vital to focus on tax administration strategies that would build, enhance and sustain the trustworthiness of organizations and officials to ensure sustainable domestic revenue for socio-economic development.
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