The Individual Impact of Tax Fairness Dimensions on Tax Compliance: Canadian Evidence

The existing tax fairness literature suggests that there are four dimensions of tax fairness: horizontal equity, vertical equity, exchange equity, and procedural fairness. Although research suggests that compliance usually increases with tax fairness, little is known about the individual impact of each dimension on compliance. Accordingly, we develop measures of each dimension, and conduct a survey using Canadian taxpayers. Using a structural equation model analysis, we find that only horizontal equity is significantly and positively associated with compliance in the Canadian context. We also develop reliable measures of tax fairness dimensions, each with a Cronbach alpha in excess of 0.8.