Do You Need a Receipt? Exploring Consumer Participation in Consumption Tax Evasion as an Ethical Dilemma

The paper focuses on the consumer side of consumption tax evasion (CTE), a subcategory of the shadow economy. The ethical dimensions of tax evasion have been effectively captured by the existent literature on tax morale, yet it fails to address the role consumers can play in CTE. Further, there is a shortage of tax morale studies that explore ethical decision making as a process composed of multiple steps and determinants. To bridge these gaps, we turned to the consumer ethics literature and Jones’ issue-contingent model of ethical decision making. We developed the conceptual model of consumer ethical decision making for CTE by incorporating four key elements from the issue-contingent model, i.e. moral recognition, moral judgement, moral intention and moral intensity, while personal moral philosophies were introduced as an antecedent to the consumer ethical decision-making process. The study was conducted on a sample of consumers from Slovenia, where CTE is a widespread phenomenon. The findings confirm that consumers’ recognition of CTE as a moral issue is influenced by their moral philosophy and perceptions regarding the magnitude of CTE’s consequences, their visibility, probability, and temporal immediacy. These perceptions also play an important role in determining consumers’ moral judgements and intentions regarding CTE. Moreover, through the process of moral recognition and moral judgement, consumers form intentions to participate in, or avoid CTE. The study holds important implications for public policy makers who are trying to reduce the tax gap in times of economic instability and fiscal crisis.