Exploring the Influence of Tax Knowledge in Increasing Tax Compliance by Introducing Tax Education at Tertiary Level Institutions

The aim of this paper is to explain why the compliance level has always been low, which raised the question of the adequacy and effectiveness of citizen tax knowledge in Malaysia. This study aims to observe the need to introduce tax education at tertiary level institutions by taking into consideration the opinion of the students themselves. The paper uses a quantitative approach by using surveys to collect data from 208 respondents. Results showed that tax knowledge was proven to be one of the factors that influenced the level of tax compliance in a particular country.


Introduction
Among the responsibilities loaded on the government of a particular country is providing some basic infrastructure for the citizens. A well-structured tax system helps generate revenue to carry out the responsibility (Edame & Okoi, 2014). As tax revenue plays a vital role in the development of countries, according to Martinez-Vazquez (2011), the government will face difficulties spending adequately to ensure economic growth if the tax revenue is too little, affecting its development. The history of the tax system in Malaysia can be traced back to 1948 when the British colonial government first introduced it in the Malay Peninsula. Issues concerning income tax were governed by the Income Tax Act 1967. The rapid development of the tax system in Malaysia is the reason for the frequent amend- The main objectives of the implementation of SAS are to increase the collection rate, minimize the costs of collecting taxes and encourage voluntary compliance. In order to achieve the objectives, the system requires taxpayers to be well-equipped with the laws and provisions as they are required to hold responsibility for reporting taxable income and assessing tax liability (Doshi & Arunasalam, 2018). However, the objectives do not always reflect reality. With the implementation of SAS, tax non-compliance has always been an alarming issue in Malaysia, mainly when the system's effectiveness depends on voluntary compliance. Malaysia was ranked top five out of 151 developing countries with an average illicit financial outflow (not taxed) of USD 41.85 billion (Kar & Spanjers, 2015). There are numerous studies conducted to understand the cause of tax noncompliance in Malaysia better (Doshi & Arunasalam, 2018). The study conducted by Loo (2006) indicated that enhancing tax knowledge among taxpayers in Malaysia is one possible way to ensure tax compliance. Some studies found that the lack of tax knowledge causes tax non-compliance as taxpayers feel the burden to file and report their taxes due to its complexity (Saad, 2014).
Soliciting opinions from university students is believed to be appropriate and highly relevant to increasing tax compliance in Malaysia by introducing tax education. Tax education is necessary to ensure that Malaysian's fresh graduates have adequate basic tax knowledge to comply with the tax requirements imposed on them, particularly as future salaried individuals. This paper intends to test the need to submit formal tax education among tertiary institutions students. This paper will also compare the level of awareness and attitude towards taxation between accounting students and non-accounting students and whether tax knowledge somehow influences their response selection. Apart from that, this paper also intends to test the knowledge on taxation among fresh graduates and their perception of introducing tax education as a compulsory subject for both streams, be it accounting and non-accounting faculty. For the purpose of this research, tax knowledge relating to individual tax, which is income tax, is suggested to be introduced and taught as one of the compulsory subjects in the university.

Tax Compliance
Previous studies discussed the issues of tax compliance by using either economic approach or socio-psychological approach (Alm, Sanchez, & Juan, 1995;Andreoni, Erard, & Feinstein, 1998;James & Alley, 2002), categorizing the factors as Open Journal of Accounting economic and non-economic factors (Alm et al., 1995;Bărbuţă-Mişu, 2011), and did discussions based on intrinsic and extrinsic motivations (Safian & Hamid, 2017). These studies aimed to identify possible solutions to promote the highest level of tax compliance. Tax compliance is defined as an act performed intentionally and consciously, based on obedience, desire and ability to comply with tax laws (Andreoni et al., 1998). It is a degree that determines the compliance rate of a taxpayer (Mohamad, Ahmad, & Deris, 2010). Regardless of the initiatives taken by the government, including the introduction of penalties, tax compliance is still a significant problem for many countries as it is challenging to persuade taxpayers to comply with the requirements (Kiow, Salleh, & Kassim, 2017). Tax non-compliance occurs when there is a difference between the actual amount of tax paid and the amount of tax owed. With the implementation of SAS, voluntary tax compliance is crucial.
Individuals' tax compliance decisions are influenced by a variety of factors, as previous research has shown. These include personal and societal norms, tax knowledge, fairness judgments, demographics, attitudes and motives of taxpayers (Hoffman, Voracek, Bock, & Kirchler, 2017;Kirchler, 2007;Kornhauser, 2007;Mckerchar, 2001;Pickhardt & Prinz, 2014). Studies have shown that taxpayers' lack of knowledge and lack of ability to comply may be the cause of tax non-compliance (Braithwaite, Reinhart, & Smart, 2010;Fjeldstad & Heggstad, 2012; Organisation for Economic Co-operation and Development (OECD), 2009). Hantono (2021) defined tax knowledge as the level of awareness or consciousness of taxpayers about tax legislation, including the process of taxation and other tax-related information. It is a situation where taxpayers fully understand why they have to pay taxes and comply with the law. Ramutumbu (2016) study proves that although the taxpayers have high tax morale to comply with the tax law, limited tax knowledge might set them back from complying. Similarly, Wong & Lo (2015) support this view, who opines that tax compliance can be improved by increased tax knowledge. Therefore, tax knowledge plays a significant role in this study.

Tax Knowledge and Tax Awareness
There are numerous studies linking tax awareness to tax compliance. As far as the research goes, awareness is one of the critical factors in ensuring tax compliance. Awareness is an intrinsic motivation that would encourage taxpayers to pay a sum of money and contribute to the development of a country (Nurkhin, Novanty, Muhsin, & Sumiadji, 2018). It is a state in which someone knows, acknowledges, respects and obeys the applicable tax provisions with utmost sincerity and desire to fulfil their tax obligations (Muliari & Setiawan, 2011). Thus, taxpayers with a higher level of awareness tend to be more compliant than those with Open Journal of Accounting lower awareness. According to Negara & Purnamasari (2018), tax awareness can certainly be increased by equipping taxpayers with basic knowledge about taxation, including the laws and the procedures that will help the taxpayers understand their duty and how to comply with their tax obligation. Thus, tax knowledge is necessary to increase tax awareness, especially to educate taxpayers on how and where the government's money is spent (Mohd, 2010). Hamid et al. (2019) support this view by indicating that higher tax knowledge and better attitude will increase the understanding of the tax system and the laws and causes significant improvement in tax awareness.
Therefore, based on the literature review discussed above, hypothesis 1 is constructed as follows: H1: Tax knowledge positively influences tax awareness to increase tax compliance.

Tax Knowledge and Attitudes towards Tax Compliance
Knowledge about taxes significantly impacts preferences and attitudes towards taxation (Eriksen & Fallan, 1996). In the same study by Eriksen & Fallan (1996), tax compliance is influenced by specific knowledge about tax regulations. The study was conducted to test students' tax knowledge. They found that as students acquired additional knowledge about tax procedures and rules in a class, tax compliance increased and tax evasion decreased. People tend to comply with tax regulations when they perceive fairness in taxation and evade tax when they think they receive no benefit. Therefore, to fully understand tax law, efforts such as training and education must be made to increase taxpayers' literacy and subsequently promote a positive attitude towards the tax (Kirchler, Heolzl, & Wahl, 2008). Alabede, Ariffin, & Idris (2011) suggest that an individual attitude towards the tax system may predict his tax compliance behaviour. Attitude is indicated as a partial indication of human's behaviour (Ajzen, 1991;Fishbein & Ajzen, 1975).
It can be either a favourable or unfavourable attitude towards something. It was further elaborated by Ajzen (1991) and Fishbein & Ajzen (1975) that a natural person would evaluate an event or object either positively or negatively. This will be the main dominant characteristic of an individual's attitude. Kirchler et al. (2008) submit that level of tax knowledge plays a vital role in tax compliance.
Higher knowledge leads to a higher compliance rate and vice versa. Hence, Kirchler et al. (2008) added that a taxpayer with a positive attitude towards tax evasion is expected to be less compliant than a taxpayer with a negative attitude.
Research conducted by (Mohamad, 2014) found that the level of taxpayers' attitudes influenced the level of tax compliance. Similarly, Bernard, Memba, & Oluoch (2018) opined that improving tax knowledge can positively influence taxpayers' attitudes and perceptions towards tax compliance. According to Singh (2003), general tax knowledge is closely related to taxpayers' compliance level. Another study by Jeyapalan, Aripin, & Amran (2003) proved that tax education positively S. N. Amin et al. Open Journal of Accounting impacts future taxpayers' attitudes and awareness towards tax avoidance and evasion. Correspondingly, a study by Niemirowski, Baldwin, & Wearing (2003) found that while a lack of knowledge can cause a negative attitude towards tax, a high level of tax knowledge can shape a positive attitude towards tax.
Therefore, based on the literature discussed above, hypothesis 2 is constructed as follows: H2: Tax knowledge positively influences the attitude towards taxes.

Tax Education
An interview was conducted with the author of Cognitive Capitalism, discussing the relationship between education and cognitive skills to develop human capital. According to Rindermann (2018), a high-quality education promotes the development of thinking, deepens knowledge, enhances personality, changes attitudes, and trains specific skills. He added that education works by improving cognitive ability, which is a combination of intelligence and knowledge (Rindermann, 2018). A study showed that education could help cultivate the necessary knowledge, skills and abilities to participate in intellectually demanding activities (Parisi et al., 2012). Park & Hyun (2003) believe that tax education would effectively induce taxpayers to comply more. Furthermore, a study was conducted in the United States and Hong Kong to test the impact of education on tax compliance. Chan, Troutman, & O'Bryan (2000) found that education, along with age, was one of the factors that drove respondents to comply with tax laws and positively influenced moral development and attitude. In contrast, there was a negative relationship between education, moral development, attitude and compliance among the respondents of Hong Kong. Therefore, it is crucial to equip taxpayers with basic knowledge about taxes as early as possible.
With the introduction of SAS, it is time for the authority to consider introducing tax education as a compulsory subject for university students. There has been no unanimous result on tax education, and some argued that tax education has no significant impact on tax compliance. In contrast, Torgler (2007)  Even though tax education has a positive possibility to enhance tax compliance, Ali & Ahmad (2014) submit that there is currently no tax syllabus being formally taught in the public education system in Malaysia. Apart from that, few studies are conducted to discuss the importance of introducing tax educa-tion at an early stage, or at least as far as the author is concerned. Therefore, this study aims to test the relationship between tax knowledge and tax compliance by introducing tax education as a compulsory subject at the university level.
Therefore, based on the provided literature review, hypothesis 3 is constructed as follows: H3: Tax knowledge mediated by formal tax education increases tax compliance.

Population and Sample
The population of this research is active students from both public and private universities in Malaysia such as Universiti Sains Islam Malaysia (USIM), Universiti Teknologi Malaysia (UiTM), Universiti Malaya and MAHSA University. The range of the age is 19 and above. According to G power analysis, the minimum sample size for the current study, with effect size 0.15, the desired statistical power level of 0.8, p-value 0.05 and 5 predictors, is 119. Hence, the minimum sample size for the present study is 119 (see Figure 1). The total number of respondents is 208, which comprises of 93 accounting students and 115 non-accounting students (see Figure 2).  This study adopted a survey questions method whereby a set of questions will be distributed among both streams, accounting and non-accounting students.
The questionnaire will be divided into two sections. The first section will consist of general questions about the respondent, including gender, ethnicity, religion, and study programme. The second section of the questionnaire will be further divided into three parts. The parts will cover questions relating to tax awareness, attitude towards tax and tax education, respectively. This part will test the influence of tax knowledge of each student when answering the questions. This is important as it will determine whether basic tax knowledge possessed by the accounting students make any difference in their selection of answers compared to the non-accounting students. As for the third part, questions on tax education will be posed to determine their perception of the importance of formal tax education and its effectiveness in increasing tax compliance among taxpayers. There are a lot of traps here since frequently used robustness tests don't provide enough data to prove structural correctness in this case. Robustness tests results that are either absolutely useless or utterly deceptive (Lu & White, 2014).

Result and Findings
Out of 209 respondents, only 205 responses can be used, while the other four have to be discarded due to incomplete answers. The respondents' demographic can be seen in Table 1. Table 1 shows that almost half of the respondents were from accounting study and the remaining 55% were from non-accounting studies. The type of study program is essential in this study to determine whether tax knowledge acquired by accounting students influences the selection of answers. Among the questions asked was whether they have ever learned taxation subject in any part of their study. The data shows that 63% of the respondents never or have not learned about taxation. Figure 3 shows the data distribution between the study program. Open Journal of Accounting  Students who answered Yes will be categorized as Group A for the data analysis, and those who answered No will be referred to as Group B. The data is collected using the Likert Scale ranging from Strongly Disagree (1), Disagree (2), Neutral (3), Agree (4), Strongly Agree (5).

Missing Data
Missing data is the process of looking at possible data entry mistakes. Following that, the data was double-checked for accuracy to ensure the sample was not biased. The data were thoroughly examined for missing values. Respondents were required to complete the online questionnaire, which had all items marked as mandatory, as previously stated. Respondents were not allowed to move on to the next S. N. Amin et al. Open Journal of Accounting section of the questionnaire and submit their response in this case if they had skipped any of the survey items, either accidentally or deliberately. As a result, no missing data issues were found during the analysis.

Data Normality
To establish if the data is normal, the skewness and kurtosis of the most important constructs were examined. Because extreme normal data might be difficult to evaluate, a second purpose was to guarantee that the data was not too far off the norm (Hair et al., 2014). When the skewness and kurtosis levels exceed 2.828 and 12, it is possible to recognise out-of-the-normal data (Kock, 2014). The normality of the data was assessed using the Kolmogorov-Smirnov and Shapiro-Wilk tests. The thumb rule assumes data normality when both skewedness and kurtosis are near to zero. A normal distribution describes the pattern of responses in this sample (Hair et al., 2014). Negative and positive numbers that fall outside the normal distribution are called non-normal. Data on the study's skewness and kurtosis may be found in Table 2.

Hypothesis Testing
The data analysis findings were used to identify the hypotheses as supported and not supported. Table 3 provides a description of the hypotheses which were tested in the study. In total 3 (Three) hypotheses were tested, 2 were supported, 1 hypothesis was found not supported.

Discussion
The questionnaire has been divided into three parts: tax awareness, attitude towards tax, and perception of tax education. The questions in this part were carefully on the responsibility to pay taxes once they start their career. The data indicated that both groups have the same awareness when majority of them answered positively. Questions such as obligation of taxpayers to calculate, to pay and to report their income tax liability were also listed to test the groups. The data collected shows positive result where both groups chose scale 4 and scale 5 to portray their opinion on the questions. This shows that both groups agree that taxpayers have the obligation to calculate, to pay and to report their income tax liability.
Despite of the awareness to pay taxes, 49% of the respondents from group B do not have the idea of the reason to pay taxes as compared to group A where only 21.3% which makes 78% of the group to have the awareness of the reason to pay taxes. The respondents were further tested on their knowledge of the tax to be the primary government revenue. Despite of 42.3% of group B and 33% of group A who answered negatively, the number of respondents from both groups who answered in positive manner are relatively high. As this can be considered as basic question on tax, it is fair to infer that group A has the advantage with the knowledge acquired in university. Tax knowledge becomes helpful when the groups were tested with practical questions. From the data, 84% of the respondents from group B has no idea how to file their taxes while only 34.6% from group A. Not only that, a big gap of knowledge can be observed when majority of group B do not familiar with the basic calculation for income tax. Therefore, even though there are similarity choice of response from both groups, it is undeniable that group A possess some kind of good advantage with the tax knowledge acquired during their course of learning especially on technical questions. The next part of the questionnaire comprises of basic questions to observe the attitude towards tax between students from Group A and Group B. Questions asked were basic questions such as citizens must comply with tax obligation, citizens cannot evade tax obligation and questions on their feeling after complying with the responsibility. On the surface of the data, it can be seen that the approach taken by both groups were quite the same, especially on logical thinking questions. For example, the majority from both groups chose scales 4 and 5 to express their attitude towards questions on tax obligation. For this particular type of question, majority from both groups answered with scale 4 (agree) and scale 5 (strongly agree) and only one to two respondents responded negatively.
The questions went on further to test the attitude of the respondents on questions related to tax evasion. Generally, the data showed not much difference between Group A and Group B. Majority from both groups responded negatively towards question on whether it is okay to evade the tax if everyone is doing it. This shows that both groups agree that tax evasion is unethical and that many people doing it do not justify the action. While most of the respondents from both groups agree that tax evasion is unethical if the tax rates are not too high, both of the groups answered positively when the reason for tax evasion is because of the unfair tax system. The question went further on to get the opinion on whether harsher punishment should be introduced to tax evaders, however, majority of the groups chose scale 3 which indicates that they were not familiar with the situation. Another set of questions were constructed on ethical questions. Here, majority from both groups answered in neutral in which it directs to the point that they need to be supplemented on tax education to better understand tax system in Malaysia. Both groups adopt the same option on the ethical questions. By looking at the data itself, it is fair to say that the element of tax knowledge possessed by group A does not vary the choice of response from group A and group B.
Before the respondents were questioned on their perception on taxation subject, they were asked to choose whether tax education and tax knowledge are beneficial to increase tax compliance. Majority of the respondents from both groups agree that tax knowledge increase tax compliance. 84.8% of the respondents agree that tax education somehow increases the ethics in tax management while 81.4% agree that tax education is important as to help reduce the risk of tax avoidance and evasion. Tax education also helps to prepare future taxpayers as it will helps in tax planning, improves morals and codes of conduct in the tax system, and increase the ethics in tax management. The question went further to have their takes for taxation to be introduced as one of compulsory subject in the university level. While 32.6% of the total of 205 respondents chose to be neutral, a total sum of 59.5% agree that it is about time to start make taxation as one of the compulsory subjects in university so that the students are better equipped with the knowledge necessary to go into the working world. This is proven with their choice of answer for the next question which 88.3% of them agree that tax education is important to increase tax compliance among future taxpayers.

Conclusion
As Malaysia is progressing to be one of the developed countries, it is necessary to take all measures to ensure a high level of compliance when it comes to paying taxes. Studies have shown that with a high level of education and knowledge on the taxation system, higher tax compliance can be assumed in a country. Therefore, it is about time Malaysia considers including basic taxation courses as a compulsory subject at the tertiary level. This is not only to prepare the future taxpayers but also to increase the level of tax compliance and subsequently decrease tax evasion. Based on the observation made through the questionnaire, students who learn about taxation in their courses of study have advantages in practical questions such as the method to file taxes and basic tax calculation. However, the study noted that similar approaches were taken by both groups when dealing with logical thinking questions such as taxpayers' ethics and responsibilities. Results of this study are largely generalizable, but a few things need to be considered. Firstly, if the sample size increased, then the results will be widely generalizable. Secondly, Open Journal of Accounting if future researchers go for the cross-cultural sample size, then affectability will be more generalizable.