Measuring and analysing deterrence in taxpayer compliance research

The tax compliance behavioural literature indicates that among other factors, demographic variables found in the social and psychology models of taxpayer compliance play an important role in the compliance behaviour of taxpayers. However, in measuring and analysing a deterrent impact the basic economic deterrence model has failed to consider these demographic factors. Consequently, this article critically examines the variables employed in the basic economic deterrence model of taxpayer compliance with respect to the measurement of deterrence and compares this with an examination of the demographic and other variables employed in the social and psychology models. The recommendation is made that selective demographic and other variables ought to be included in a combined or expanded model in order to best measure deterrence. This will not only ensure how deterrent measures are revealed but more importantly, how taxpayers' perceptions of deterrent measures are formed.