Powerful authorities and trusting citizens: The Slippery Slope Framework and tax compliance in Italy

The Slippery Slope Framework of tax compliance postulates that citizens’ compliance depends on the power of the authorities to enforce compliance and/or trust in the authorities and voluntary cooperation. While trust is widely recognized as a strong determinant of cooperation, empirical evidence is less clear on power: severe fines may lead towards compliance or even have the opposite effect. We propose a thorough investigation of the nature of power (coercive versus legitimate) within the theoretical framework of tax compliance to shed light on the ambiguous results and to clarify the complex relation between power and trust. We use structural equation modeling to test the assumptions of the Slippery Slope Framework by taking into account coercive power and legitimate power on a sample of N = 389 self-employed Italian taxpayers and entrepreneurs. We found evidence that trust is positively related to voluntary tax compliance. Trust was found to be negatively related to coercive power and positively related to legitimate power. Both coercive power and legitimate power were correlated with enforced compliance. However, the effect of enforced compliance leads to increased evasion. The results evidence the multifaceted nature of power and trust and their relation with tax compliance, and the importance of power and trust in political regulatory strategies.

► The assumptions of the Slippery Slope Framework are empirically evidenced on a sample of Italian taxpayers.
► A differentiation of legitimate and coercive power within the framework is provided.
► While legitimate power is positively related to trust, coercive power is negatively related.
► Legitimate as well as coercive power impact influence enforced compliance.
► Compared to the power-path, the trust-path of compliance is more efficient in combating evasion.