Factors Affecting Consumers Compliance Intention: Consumption Tax Evasion as an Ethical Dilemma

Consumption tax evasion (CTE) is an ethical dilemma that can enlarge the presence of the shadow economy. The empirical literature mainly focused on the ethical dimension of the business community, thus there is insufficient literature related to the ethical decision-making process on the consumer’s side. So, the present study attempts to explore the ethical decision-making process of consumers regarding CTE. The study used three major components of Jones’s Issue Contingent Model to study the consumer’s ethical decision-making regarding CTE. The study proposes a conceptual model by linking idealism, relativism, religiosity and attitude with the three components of the issue contingent model. The result of the study was based on primary data collected from consumers in the Kerala State. The data obtained was examined using the PLS-SEM technique which confirms the influence of idealism, relativism and attitude on the moral recognition of consumers regarding CTE. The result also concludes that moral recognition leads to moral judgement, which in turn, plays a vital role in inculcating moral compliance intention in the minds of consumers.