Determinants of Tax Morale in Ethiopia with Emphasis on the Moderating Roles of National Pride and Fiscal Exchange on the Effect of Trust: Evidence from Taxpayers in Addis Ababa City Administration, Ethiopia

Abstract

This study examines the determinants of tax morale in Ethiopia with emphasis on the moderating roles of national pride and perceived fairness of fiscal exchange in the relationship between trust in government and tax morale. By employing a correlation matrix, PROCESS Macro, and hierarchical regression analyses, we examined the association between the independent variables and the dependent variable as well as the moderating roles of national pride and fiscal exchange on the effect of trust on tax morale. The correlation matrix revealed that the empirically documented relationships between tax morale and such independent variables as gender, corruption, and religiosity did not hold in this study as the correlations were found to be insignificant. More importantly, however, we found support for our hypotheses that posit that national pride and fiscal exchange moderate the effect of trust on tax morale. Nonetheless, the moderating effects are opposite in that national pride moderates the effect of trust on tax morale when it is at its high level, whereas fiscal exchange does the moderation when it is at its low level. The findings imply interesting theoretical and policy inputs with data from a typical developing country, Ethiopia.