BUILDING TAX MORALE FOR SUSTAINABLE MICROENTERPRISE GROWTH: THE ROLE OF AWARENESS, FAIRNESS, AND TRUST
Article Sidebar
Read Counter : 2
Download : 5
Main Article Content
Abstract
Achieving the United Nations Sustainable Development Goals (SDGs) depends not only on policy reforms but also on the fiscal behavior of citizens and entrepreneurs, making taxation a key driver of sustainable governance and inclusive development. Anchored in the Tax Morale Theory and Fiscal Exchange Theory, this study examines how tax awareness, perceived fairness, and trust in government relate to the tax morale of microbusiness owners in Marawi City, Philippines. Descriptive statistics indicated a high level of tax awareness but neutral perceptions of fairness, moderate trust in government, and tax morale. Correlation analysis showed that all three independent variables have a significant relationship with tax morale, with trust in government demonstrating the strongest relationship. Multiple regression analysis further revealed that trust in government was the only significant predictor of tax morale. These findings highlight that awareness and fairness contribute to tax morale primarily when accompanied by institutional trust. Strengthening transparency, equitable enforcement, and participatory fiscal management is therefore essential to foster voluntary compliance and promote the sustainability of microenterprises in post-conflict Marawi City. The study underscores institutional trust as a cornerstone of responsible taxation behavior, which is essential for sustaining microentrepreneurship and advancing inclusive and resilient local governance.
Article Details
Section
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
This journal provides immediate open access to its content on the principle that making research freely available to the public supports a greater global exchange of knowledge.
IJAEB by Graduate Program of Universitas Tarumanagara is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.. Permissions beyond the scope of this license may be available at https://journal.untar.ac.id/index.php/ijaeb
References
Alm, J., & Torgler, B. (2006). Culture differences and tax morale in the United States and in Europe. Journal of Economic Psychology, 27(2), 224–246. https://doi.org/10.1016/j.joep.2005.09.002
Bakar, M. A. A. A., & Hassan, N. S. I. (2023). Power of tax authorities, tax morale, and tax compliance. Asian Journal of Business and Accounting, 16(1), 1–24. https://ajba.um.edu.my/index.php/AJBA/article/view/41025
Balating, S. A., Cataluña, C. T., Maraon, J., Labasan, C. M. D., Libre, J. B., Lubon, C. K. F., Musa, I. R., & Bankas, M. H. (2025). Level of awareness of income taxation among entrepreneurs. Psychology and Education Journal, 38(8), 974–981. https://doi.org/10.5281/zenodo.10815592
Bangko Sentral ng Pilipinas. (2025, October 9). Monetary Board reduces policy rate to 4.75 percent amid easing inflation and slower growth prospects. Bangko Sentral ng Pilipinas. https://www.bsp.gov.ph/SitePages/PriceStability/MonetaryPolicyDecision.aspx
Batrancea, L., Nichita, A., Olsen, J., & Kogler, C. (2019). Trust and power as determinants of tax compliance across 44 nations. Journal of Economic Psychology, 74, 102191. https://doi.org/10.1016/j.joep.2019.102191
Bobek, D., Hageman, A., & Hausserman, C. (2025). Are fairness perceptions related to moral licensing behavior? Evidence from tax compliance. Journal of Business Ethics, 198, 199–221. https://doi.org/10.1007/s10551-024-05784-y
Bray, J. (2009). The role of private sector actors in post-conflict recovery. Conflict, Security & Development, 9(1), 1–26. https://doi.org/10.1080/14678800802704895
Bureau of the Treasury (BTr). (2024). Fiscal risk statement 2024. Department of Finance. https://www.treasury.gov.ph/?page_id=39249
BusinessWorld Online. (2025). BSP surprises with rate cut as corruption mess darkens outlook. BusinessWorld Online. https://www.bworldonline.com/top-stories/2025/10/10/704300/bsp-surprises-with-rate-cut-as-corruption-mess-darkens-outlook/
Castañeda-Rodríguez, V. M. (2025). Association between tax morale and perceptions of fairness and trust in the tax system. International Economics and Economic Policy. https://doi.org/10.1007/s12232-025-00487-w
Cobham, A. (2022). Taxing for a new social contract. Finance & Development, 59(1). International Monetary Fund.
Dela Rama, M. (2011). Corporate governance and corruption: Ethical dilemmas of Asian business groups. Journal of Business Ethics, 109(4), 501–519. https://doi.org/10.1007/s10551-011-1147-1
Department of Trade and Industry–Philippine Statistics Authority. (2023). 2023 MSME statistics. https://www.dti.gov.ph/resources/msme-statistics/
Feld, L. P., & Frey, B. S. (2007). Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation. Law & Policy, 29(1), 102–120. https://hdl.handle.net/10419/214356
Granfon, J. A., Lagare, W. N. J. D., Aling, D. A., Dangcalan, N. B. D., & Ebanay, A. A. (2023). Factors affecting tax compliance of MSMEs in Dipolog City. International Journal of Multidisciplinary: Applied Business and Education Research, 4(4), 1350–1364. https://doi.org/10.11594/ijmaber.04.04.29
Hayat, N., Zamri, M. Z., & Ghani, E. K. (2022). Tax compliance behavior among Malaysian taxpayers: An artificial neural network approach. SAGE Open, 12(4), 1–17. https://doi.org/10.1177/21582440221127190
International Labour Organization. (2021). Formalization of informal enterprises: Good practices and lessons learned. Geneva: International Labour Office. https://www.ilo.org/global/topics/employment-promotion/informal-economy/publications/WCMS_790137/lang--en/index.htm
Khozen, I. (2023). Managing taxpayer compliance: Reflections on the drivers of willingness to pay taxes of individuals who survived COVID-19 in Greater Jakarta. Cogent Business & Management, 10(1), 2218176. https://doi.org/10.1080/23311975.2023.2218176
Kogler, C., Batrancea, L., Nichita, A., Pantya, J., Belianin, A., & Kirchler, E. (2013). Trust and power as determinants of tax compliance: Testing the assumptions of the slippery slope framework in Austria, Hungary, Romania and Russia. Journal of Economic Psychology, 34, 169–180. https://doi.org/10.1016/j.joep.2012.09.010
Lago-Peñas, I., & Lago-Peñas, S. (2010). The determinants of tax morale in comparative perspective: Evidence from European countries. European Journal of Political Economy, 26(1), 441–453. https://doi.org/10.1016/j.ejpoleco.2010.01.001
Mas’ud, M. A., Manaf, N. A. A., & Saad, N. (2019). Trust and power as predictors to tax compliance: Global evidence. Economics and Sociology, 12(2), 192–204. https://doi.org/10.14254/2071-789X.2019/12-2/12
Nastiti, A. S., Purwantini, A. H., & Rahmawati, R. (2025). Role of business sustainability, patriotism of business actors, and digital transformation in increasing MSME tax compliance. Journal of Innovation and Entrepreneurship, 14(1), 1–15. https://doi.org/10.1186/s13731-025-00493-5
Nguyen, T. H. (2022). The impact of non-economic factors on voluntary tax compliance behavior: A case study of small and medium enterprises in Vietnam. Economies, 10(8), 179. https://doi.org/10.3390/economies10080179
Nguyen, T. L. A., Tran, D. A., & Nguyen, H. H. (2025). Tax morale, tax rate and voluntary personal income tax compliance post-COVID-19 pandemic: Evidence from Vietnam. International Journal of Scientific Research and Management, 13(4), Article EM05. https://doi.org/10.18535/ijsrm/v13i04.em05
OECD. (2019). Tax morale: What drives people and businesses to pay tax? OECD Publishing. https://doi.org/10.1787/f3d8ea10-en
Pacaldo, R. S., & Ferrer, R. C. (2020). Determinants of tax morale using structural equation model (SEM). De La Salle University Research Congress Proceedings, 8(1), 1–10. https://www.dlsu.edu.ph/wp-content/uploads/2020/02/4PACALDO-012120.pdf
Rahman, M. M. (2023). Impact of taxes on the 2030 Agenda for Sustainable Development: Evidence from OECD countries. Heliyon, 9(8), e18140. https://doi.org/10.1016/j.heliyon.2023.e18140
Rashid, M. H. U. (2020). Taxpayer’s attitude towards tax evasion in a developing country. International Journal of Applied Behavioral Economics, 9(2), 1–19. https://doi.org/10.4018/IJABE.2020040101
Sijabat, M. R., & Harjanto, B. (2024). Taxation perspectives: Analyzing the factors behind taxpayer morale in developing countries. Journal of Risk and Financial Management, 17(1), 5. https://doi.org/10.3390/jrfm17010005
Sjöberg, L., Herber, A., & Karlsson, N. (2019). Perceived fairness, trust, and tax compliance: A study of attitudes toward tax authorities. Journal of Behavioral Public Administration, 2(1), 1–12. https://doi.org/10.30636/jbpa.21.84
Tengs, M. (2020). Taxation as a social contract (Working Paper No. 2020:10). University of Gothenburg.
Tishar, A. I., & Hasanuzzaman, S. (2019). Examining different factors of income tax non-compliance in a small sample in Bangladesh. Economics and Business, 33(1), 35–49. https://doi.org/10.2478/eb-2019-0003
Umali, O. S. (2024). Tax literacy and tax compliance of the selected micro business in Cabuyao City. International Journal of Multidisciplinary and Current Educational Research, 6(3), 333–363. https://ijmcer.com/wp-content/uploads/2024/06/IJMCER_Y0630333363.pdf
Ul Albab, F. N., & Suwardi, E. (2019). The effect of tax knowledge on voluntary tax compliance among MSMEs: The mediating role of trust. Proceedings of the International Conference on Business and Management Research, 9799–9808. https://doi.org/10.33312/ijar.528
United Nations Development Programme. (2023). Rebuilding Marawi through inclusive livelihood and peacebuilding initiatives. United Nations Development Programme Philippines. https://www.ph.undp.org/
United Nations Human Settlements Programme (UN-Habitat). (2022). Rebuilding Marawi: Achievements of the UN-Habitat Rebuilding Marawi Project. United Nations Human Settlements Programme Philippines. https://unhabitat.org.ph/rebuilding-marawi/
Williams, C. C., & Horodnic, I. A. (2017). Evaluating the policy approaches for tackling undeclared work: A comparison of government strategies in the European Union. International Journal of Sociology and Social Policy, 37(5/6), 347–366. https://doi.org/10.1108/IJSSP-07-2016-0085
Williams, N., & Vorley, T. (2017). Fostering productive entrepreneurship in post-conflict economies: The importance of institutional alignment. Entrepreneurship and Regional Development, 29(5–6), 444–466. https://doi.org/10.1080/08985626.2017.1297853
World Bank. (2022). MSME finance gap: Assessment of the shortfalls and opportunities in financing micro, small, and medium enterprises in emerging markets. World Bank Group. https://www.smefinanceforum.org/data-sites/msme-finance-gap