Does Service Quality Influence Tax Compliance Behaviour of SMEs? A New Perspective from Ghana

While many factors influence tax compliance behaviour, this study aims to examine the effect of the quality of tax services on the compliance behaviour of small and medium-sized enterprises. The study used the survey to test five hypotheses with the aid of frequency tables, regression and correlation analyses. The study found statistically significant positive effects of reliability, responsiveness, assurance, and empathy on the tax compliance behaviour of SMEs. Secondly, there are varying positive correlations amongst key tax service quality measures. The research has several implications for taxing authorities and policy makers due to its effect on tax revenue generation for economic growth and development. The novelty of this paper lies in its premier attempt to enrich the literature on the tax service qualitytax compliance behaviour nexus with the adoption of Parasuraman et al. (1988)’s service quality indicators. In employing these tax service quality indicators, a better understanding is gained into tax non-compliance behaviour, which emanates from poor service quality. The findings provide some insights to taxing authorities and policy makers in drafting policies to enhance tax compliance by improving, digitising and modernising tax administration for maximum revenue mobilisation to drive economic growth.


INTRODUCTION
Many emerging economies, including Ghana, are heavily dependent on taxation as a means of generating the required financial capital to meet their ever-increasing spending requirements to ensure economic growth and improve the quality of citizens' lives. However, many of these economies do not collect much tax revenue due to a variety of inhibiting factors (Amoh and Adom, 2017;Amoh and Ali-Nakyea, 2019) Specifically, according to the Institute of Statistical Social and Economic Research, ISSER (2019), Ghana has had low levels of tax compliance in recent years, impacting the mobilization of tax revenue.
According to Okpeyo et al. (2019), tax non-compliance is a challenging issue for emerging economies like Ghana which demands attention. Al-Ttaffi and Abdul-Jabbar (2016) have argued that to improve tax compliance, quality of service tax provision must be excellent. This is because one way of addressing tax non-compliance is a superior tax service quality provided by tax officials (Al-Ttaffi and Abdul-Jabbar, 2016). Thus, it is expected that where tax service quality levels are high, a positive tax compliance behaviour among taxpayers is evoked. The implication is that taxpayers will normally collaborate with quality taxservice-providing taxing authorities, who also treat the taxpayers as partners in the revenue mobilisation agenda (Ameyaw et al, 2016). Satisfaction with the government and the tax authority's This Journal is licensed under a Creative Commons Attribution 4.0 International License service delivery also encourages taxpayers to comply with tax rules (Vigoda-Gadot, 2007).
The motivation for this paper is the low level of tax compliance in Ghana (ISSER, 2019) and other emerging economies which translates into low tax revenues and explains the rising debts levels to meet the increasing government expenditures (Amoh and Adom, 2017;Amoh and Ali-Nakyea, 2019). Secondly, the problem of tax non-compliance in emerging economies like Ghana is mainly as a result of the large informal sector and the lack of proper systems and structures to enforce tax laws (Ameyaw, et al., 2007). This large informal sector is dominated by a large pool of Small and Medium Scale Enterprises, SMEs (Ghana Living Standards Survey, GLSS 7, 2017). Thirdly, though some studies have been conducted on how tax service quality influences tax compliance behaviour (Alabede et al., 2011;Osei-Darko, 2012;Hidayat et al., 2014;Al-Ttaffi and Abdul-Jabbar, 2016;Awaluddin and Tamburaka, 2017;Wisudawaty et al., 2018), the results are mixed. While some of the studies posit a positive relationship, others report a negative association.
In this light, this study was conducted by surveying some selected SMEs in the Madina, Makola, Tema and Kaneshie municipalities to assess the effects of tax service quality of Ghana revenue authority (GRA) on the compliance behaviour of SMEs in Ghana to gain fresh insights into the phenomenon. Relying on Parasuraman et al. (1988)'s service quality indicators, the study examined the impact of reliability, responsiveness, empathy and assurance of taxing authorities on tax compliance behaviour of SMEs. Accordingly, the hypotheses to be tested to achieve the study objectives are: H 1 : Does the responsiveness of tax officials affect the tax compliance behaviour of SMEs? H 2 : Does the reliability of tax officials affect the tax compliance behaviour of SMEs? H 3 : Does the empathy of tax officials affect the tax compliance behaviour of SMEs? H 4 : Does the assurance of tax officials affect the tax compliance behaviour of SMEs? H 5 : Are there any correlations amongst the tax service variables?
To test these hypotheses, nine hundred and sixty-eight (968) survey responses were analysed from one thousand and two hundred (1200) questionnaires administered to SMEs of four business enclaves. With the aid of frequency tables, multiple regression and correlation analyses the research hypotheses were addressed for policy decisions and implementation.
The study is interesting, unique and a premier attempt in the area of tax service quality-compliance behaviour nexus literature because firstly, it focuses on the effects of the tax service quality indicators advocated for by Parasuraman et al. (1988): responsiveness, reliability, empathy and assurance on tax compliance behaviour. According to Parasuraman et al. (1988), the importance of these service indicators is that they represent an overall measurement of the ingredients of an excellent service delivery. Second, the paper has empirically enhanced the quality of research in this under-researched area, particularly in countries south of the Sahara.
Third, the results are representative because, with the selection of respondents from four different business enclaves from different locations, the distinctive features of small and medium-sized enterprises in emerging economies are being harnessed.
The next chapter presents a succinct review of related relevant literature. Chapter 2 discusses the methodology of the study. Chapter 4 presents results and discussions. The conclusions and policy implications are discussed in Chapter 5.

LITERATURE REVIEW
This section reviews theories that establish relationships between tax service quality and tax compliance behaviour as well as relevant empirical literature.
With respect to tax compliance, Kirchler et al. (2008) posited that governments and tax authorities have primary interest and responsibility to ensure that citizens comply with this civic duty and behave in compliance with the provision of tax laws irrespective of their social status. According to Brown and Mazur (2003), tax compliance theoretically involves compliance with respect to payment, filing, and reporting. Kirchler (2007) explains that tax compliance is the preparedness of taxpayers to honour his or her tax obligations.
The main tax compliance theories underpinning this research are the psychology theory of tax compliance, comparative treatment theory, and the political legitimacy theory. These theories posit that taxpayers consider certain factors in taking tax compliance decisions. For example, when tax services provided by taxing authorities are excellent, positive tax compliance behaviour will be enhanced.

Tax Service Quality Indicators
The issue of service quality is an important indicator for the success of any business organisation in today's competitive environment. According to Tjiptono and Chandra (2011), service quality is an attempt to fulfil needs and desires of customers and deliver accuracy in balancing customer expectations. Service quality for the taxing authorities in emerging economies and developing countries is even more critical because of poor level of tax revenue performance (Amoh and Ali-Nakyea, 2019). Parasuraman et al. (1988) submit that quality is a measure of overall assessment of the level of a good service, hence tax service quality encompasses the provision of all the best services to the maximum satisfaction of taxpayers in their tax compliance efforts. Prior literature has documented some indicators of service quality. Khudri and Sultana (2015) argue that there are five determinants of service quality: personal interaction, appearance, reliability, policy, and problem solving. Parasuraman et al. (1988) theorised that perceived service quality is a worldwide verdict or attitude which relates to the provision of superior service. Accordingly, Parasuraman et al. (1988) proposed five main indicators of service quality, capable of capturing all the ramifications of the phenomenon: tangibles, reliability, responsiveness, assurance, and empathy.
With respect to tax service quality proposed by Parasuraman et al. (1988), responsiveness refers to the agility with which tax authorities respond to the enquiries and needs of taxpayers. Reliability refers to the capability of the taxing authorities to deliver excellent service to taxpayers dependably and accurately. Assurance involves the trust and confidence taxpayers repose in the tax authorities to deal faithfully with them. When tax authorities make the needs of taxpayers their priority and also empathize with them, then the quality of empathy is activated. Tangibility refers to the physical image of the services provided by tax authorities to the taxpayers such as physical facilities, tools and machines.

Tax Service Quality-tax Compliance Behaviour Nexus
A number of studies have tried to establish the relationship between tax service quality and tax compliance behaviour in different countries. This section reviews some to enable the researchers situate the current paper. Alabede et al. (2011) analysed the effect that tax service quality has on tax compliance behaviour in Nigeria. The study found that perceived tax service quality is positively and significantly related with tax compliance behaviour. Further, the study concluded that taxpayers' financial condition and risk preference jointly moderate the relationship between perceived tax service quality and compliance behaviour. Hidayat et al. (2014) assessed the indicators and variables that form quality of tax services, regional tax regulations, taxpayer satisfaction level, taxpayer behaviour and their compliance in theory using confirmatory factor analysis (CFA) approach. The study found responsiveness to be the most significant tax service quality.
Al-Ttaffi and Abdul-Jabbar (2016) analysed the impact of tax service quality on taxpayer behaviour of SMEs in Yemeni. Adopting a simple regression analysis, the study found that the perceived tax service quality has a significant negative influence on tax non-compliance behaviour. Awaluddin and Tamburaka (2017) examined the effect of service quality and taxpayer's satisfaction to the compliance of paying motorized vehicle tax in the Kendari office. The study found that service quality affects significantly the taxpayers' compliance of motorized vehicle tax. Wisudawaty et al. (2018) focused on investigating the effect of system quality, information quality, and service quality on the taxpayer compliance. The research showed that system quality, information quality and service quality all influence taxpayer compliance behaviour.
The nature of the tax service quality-tax compliance behaviour phenomenon has many implications for public makers and governments because of its impact on tax revenue mobilisation especially in emerging economies. This necessitates more empirical work from different perspectives with different methodologies to draft policies to encourage tax compliance. Hence, this paper contributes to literature by firstly, enhancing the quality of research papers in this under-researched area in countries south of the Saharan. Secondly, adopting the service quality measures of Parasuraman et al. (1988) to study the relationship is not only unique but also a premiering attempt.

METHODOLOGY
This section discusses the sample size, research instrument and the model specified to test the hypotheses.

Sample Size and Survey Instrument
The determination of an appropriate sample size for the nature of this research depends on the ability to get a good number of SMEs clustered in one area and hence the choice of the four main industry enclaves. Also, the four municipalities have the ability to be representative of the SMEs in Ghana. Furthermore, Tema is considered the industrial hub of Ghana.

Survey Instrument
This study employed the survey technique by administering questionnaires in the year 2019 to a sample of SME taxpayers in the Makola, Madina, Tema and Kaneshie business centres. This was done after an extensive review of literature on the research problem.
The convenience sampling techniques were adopted to administer three hundred questionnaires to the SMEs of each of the four business and industrial centres. The questionnaires were personally administered by a team of eight final year accounting students from the University of Professional Studies, Accra (UPSA), Ghana. The data collectors were briefed and trained for the questionnaire distribution. Furthermore, the questionnaires were pre-tested to increase the validity of the questions and also to address potential challenges at the preliminary stages of questionnaire administration.
The questionnaire has two sections: Section A asked questions concerning the demographics of the respondents whilst Section B consisted of fifteen statements on the tax service quality-tax compliance nexus. To test the hypotheses, the study used a fivepoint Likert scale, where the respondents were asked to select the appropriate number, ranging from "strongly agree =1 to strongly disagree = 5." For example, with a statement like this: GRA staff keep taxpayers informed and updated on current laws and services, respondents were asked to select the appropriate number ranging from "strongly agree =1 to strongly disagree =5).
Selecting respondents from four different business enclaves ensures that the responses are encompassing of the several unique characteristics of SMEs in emerging economies.

Model Specification
A correlation matrix was constructed to examine the association between selected pairs of tax service quality variables. To test the tax service quality and tax compliance relationship, a multiple linear regression technique was adopted. Following Parasuraman et al. (1988), the study adopted the following the tax service indicators: responsiveness, reliability, assurance and empathy, for which structured questionnaires relating to each one of them in our study was designed.

PRESENTATION AND DISCUSSION OF RESULTS
This section presents the findings and discussions of the demographic data of the respondents and the research hypotheses. Results were analysed for nine hundred and sixty-eight survey responses representing about eighty-one (80.66) per cent response rate. The survey responses were analysed and loaded into an econometric software to generate the regression and correlation results.

Testing the Research Hypotheses
To test the hypotheses, frequency tables, regression and correlation analyses were employed. The results of the effect of the tax service quality measures being regressed on the tax compliance behaviour are presented in Table 2 for discussion.
The r-squared and adjusted r-squared are 59.19% and 49.59% respectively, which suggest that the tax service quality measures are capable of explaining any variations in tax compliance  behaviour. The F-statistic which signifies the overall significance of the regression model is significant and hence the results could be analysed and inferences made therefrom for policy decision making. From the regression results all the tax service quality measures impact tax compliance behaviour of SMEs positively and significantly.
In addition to the regression analysis, the survey responses were tallied and expressed in percentages for discussion to validate or disprove the regression output.

Testing research hypothesis one (H1)
The first research hypothesis seeks to examine the effect of responsiveness of tax officials in their service delivery on tax compliance behaviour.
From Table 3, 72% of the respondents believe that GRA staff provide prompt services while with 28% had a contrary view. 44% of the respondents also affirmed that the employees of GRA are always willing and ready to assist taxpayers, with 56% indicated that GRA staff are not supportive of taxpayers. As to whether the tax authorities are reluctant in responding to taxpayers' complaints, 100% reported in the affirmative.
Additionally, from Table 2 on the regression, responsiveness of GRA staff has a positive and significant impact on tax compliance behaviour. The study therefore concludes that the responsiveness of the taxing authorities has a positive and significant effect on the tax compliance behaviour of SMEs. The current study is consistent with the work of Osei-Darko (2012), who argued that customer satisfaction in service delivery is very critical to the operations and survival of organizations.

Testing research hypothesis two (H2)
The second research hypothesis seeks to ascertain the effect of the reliability of service provision of tax officials on tax compliance behaviour of SMEs. Table 4 summarises the research findings.
With the first statement, Table 4 shows that 30.6% of the respondents fairly agreed that GRA staffs are consistent and dependable in their service delivery to taxpayers with 69.4% disagreeing with that assertion. The second and third statements sought to find out whether GRA staff perform transactions accurately and timely, respectively. From the results, 16.6% of the respondents fairy agree that GRA staff are accurate in their delivery of services whilst 83.4% disagreed. Also, on the timeliness of tax service provision, 38% fairly agreed with the timeliness assertion whiles 62% disagreed. Finally, 46% of taxpayers agreed that GRA staff keep them informed and updated on current laws and services with 56% disagreeing.
From the regression analysis in Table 2, reliability of service of GRA staff is seen to impact positively and significantly on the behaviour of SMEs to comply with tax laws. The study therefore concludes that reliability of the taxing authorities has a positive and significant effect on the compliance behaviour of SMEs which is consistent with the findings of Alabede et al. (2011) and Wisudawaty et al. (2018), who found that system quality has an influence on taxpayer compliance, and hence tax service quality has an impact on the taxpayer compliance behaviour.

Testing research hypothesis three (H3)
The third research hypothesis examined how the assurance that SMEs have in the service delivery of GRA staff affects their tax compliance behaviour. The results as displayed in Table 5 reports that 56% of SMEs fairly agreed that the GRA staff build trust and confidence whiles 44% disagreed. On the second statement, 78% of SMEs feel safe when transacting business with the GRA staff with 22% disagreeing. 79% of SMEs agreed that GRA staff are courteous and cheerful when serving them. However, 21% of SMEs had dissenting views.
Finally, 57% of respondents fairly agreed that GRA staff provide in-depth answers in response to their complaints. 43% disagreed with the fourth statement. This current study found that the perceived assurance from GRA staff in their service delivery has an effect on the compliance behaviour of SMEs.
Table 2 further reports that assurance as a tax quality service measure, drives compliance behaviour of taxpayers positively and significantly. This finding is consistent with Alabede et al. (2011) and Wisudawaty et al. (2018), who found that tax service quality has an impact on the taxpayer compliance.

Testing research hypothesis four (H4)
The fourth research hypothesis assessed the impact of empathy of the GRA staff with respect to their service delivery on tax compliance behaviour of SMEs. From Table 6, 18% of respondents fairly agreed that GRA has the interest of taxpayers at heart with 82% disagreeing with that assertion. As to whether GRA staff understand the needs and wants of taxpayers, 45% of respondents indicated that they agree while 65% disagreed.
In the case of the third statement, whilst 65% of respondents disagreed with the assertion that GRA staff give their undivided attention when serving taxpayers while 35% fairly agree. Lastly, on the issue of whether GRA conducts business within hours convenient to taxpayers, 28% of respondents fairly agreed and 72% disagreeing.     Furthermore, Table 2 shows that empathy as tax service quality measure has a positive and significant effect on the tax compliance behaviour of taxpayers. The study therefore, concludes that the empathy of the taxing authorities to taxpayers in their service delivery has positive and significant impact on their tax compliance behaviour.

Testing research hypothesis five (H5)
From Table 7, there are positive correlations amongst tax service quality variables when pegged at 0.05 significance level.
The implication is that pairs of tax service quality variables exhibit moderate correlations ranging from 0.5037 to 0.5389 within the the Makola, Madina,Tema and Kaneshie business centres.

CONCLUSION AND POLICY IMPLICATIONS
The aim of the paper was to examine the effects of tax service quality on tax compliance behaviour of SMEs in the the Makola, Madina, Tema and Kaneshie business enclaves. The study adopted a survey instrument using a convenience sampling technique to collect data to test five hypotheses. The results are summarised below: • Responsiveness: GRA staff provide prompt services to taxpayers but are always willing and ready to support taxpayers with their issues. In addition, GRA staff are reluctant in responding to taxpayers' complaints • Reliability: GRA staff are not consistent and dependable in their service delivery to taxpayers and also do not execute their jobs accurately. The GRA staff do not perform their tax transactions timely and do not keep taxpayers informed on new tax laws and services • Assurance: GRA staff do not build trust and confidence in taxpayers and do not make taxpayers feel safe when dealing with them. However, The GRA staff are courteous and cheerful when dealing with taxpayers • Empathy: GRA staff seem not to have the best interests of the taxpayers at heart and also do not give taxpayers their undivided attention when dealing with them. Finally, GRA do not conduct business within convenient time periods to taxpayers • There were statistically significant positive correlations amongst tax service quality measures • All the tax service quality variables (responsiveness, reliability, empathy and assurance) positively and significantly influence tax compliance behaviour of SMEs.
The paper enriches the literature on tax service quality-tax compliance behaviour relationship by the adopting key measures of service quality by Parasuraman et al. (1988), which is a pioneering attempt. Secondly, empirically the paper has enriched the quality of research on this under-researched field, especially in countries south of the Saharan. Thirdly, the results are representative because with the selection of respondents from four dissimilar business enclaves from different locations, the distinctive features of SMEs in emerging economies is harnessed.
The results provide policy makers and taxing authorities with a better comprehension of the phenomenon to develop tax policies to improve, digitise and modernise tax administration to augment tax compliance behaviour to mobilise tax revenue for economic growth and the also for the achievement of sustainable development goals.