1# andPower, Trust, and Tax Compliance of SME Taxpayer

Abstract

Sri Lanka is currently facing a problem with achieving its tax revenue targets. The government can collect tax money from citizens, either through enforcement or by letting them contribute voluntarily. However, the tax authority should take a firm decision to choose between enforcement of power of the revenue body or to develop mutual trust between the tax authority and the relevant parties of the society in the process of collecting tax. The objective of the study is to empirically examine the influence of power and trust on enforced tax compliance and that of voluntary tax cooperation. A survey was conducted from January 1, 2020, to January 31, 2020 to collect data, and 408 Small Medium Taxpayers responded. Simple Regression analysis was used to interpret and analyze the data. All hypotheses are accepted and proved that there are positive relationships between power, trust, voluntary compliance, and enforced compliance. The findings suggest that by improving trust and voluntary compliance, an efficient tax compliance could be developed.