Tax evasion in Lebanon : investigating the dynamics of Cressey's hypothesis

Abstract

This study attempts to assess the merits of Cresseys hypothesis in explaining the perception of tax evasion in Lebanon. Cresseys hypothesis consists of three components: "pressure", "opportunity", and "rationalization". Thus, the main aim is to identify which elements of this hypothesis (theory) have more explanatory power of tax evasion. Moreover, demographic data are assessed to investigate how respondents views about tax evasion vary with respect to age, gender, governorate, educational level, religion, marital status, employment status, and yearly income. Using a deductive approach, data was collected through an online questionnaire. In order to interpret the data four analysis steps are considered: a reliability analysis, descriptive statistics, analysis of variation, and a partial least square structural equation model. The questionnaire used in this study to collect the data is considered reliable having a Cronbachs Alpha value of 0.862. With respect to demographics, three variables (gender, age, and academic background) cause a variation in the responses of respondents. Regarding gender of respondents, there is a difference males and females opinion with respect to the perception of tax evasion and financial pressure. As for age, there is a difference between the two categories of age (below or above 28) of respondents with respect to the rationalization of tax evasion. Whereas, the perception of tax evasion varies with respect to the academic background of respondents. In addition, findings show that existing opportunities to evade taxation are the most significant of is the components of Cresseys hypothesis that affects the perception of tax evasion in Lebanon.