Individuals’ knowledge of the Irish Tax system & the Impact on Tax Compliance

Abstract

Tax knowledge is an asset which brings numerous benefits to the holder and to the society in general, being a vital component for a reasonable level of compliance. In the absence of such knowledge, taxpayers and tax authorities are impacted simultaneously, making it more difficult for both parties to exercise their roles efficiently. The literature brings a continuing debate about what the individuals’ level of taxation knowledge is and the various ways which it can impact taxpayers’ behaviour.

The core objectives of this research project are to assess the degree of knowledge possessed by individual taxpayers living in the Republic of Ireland and how it can be a barrier for compliance. Likewise, this aims to explore the obstacles at comprehending the taxation system, the key role that tax authorities play in this context, and what impact threats and penalties may have on taxpayers.

It was employed a mixed methods approach to gather the evidence required to respond the overall question. Questionnaire and interviews were carried out to evaluate how much taxpayers know. According to data collected, individuals consider the tax system very complex with a very technical language despite information related to it being easily accessible. The overall conclusion is that individual taxpayers possess a low level of knowledge, mostly driven by the lack of financial knowledge in schools and complexity of the system itself, which reduces the ability and hence the degree of compliance.