Employment status and income level as determinants of personal income tax compliance: Evidence from South Africa

Abstract

Abstract: Purpose. This study examines the influence of demographic factors on personal income tax (PIT) compliance among taxpayers in Mbombela, Mpumalanga, South Africa, to address persistent revenue shortfalls that undermine government fiscal capacity. Methodology. Employing a positivist research philosophy and cross-sectional survey design, the study utilized a random sample of 103 taxpayers from a population of 2,679 registered taxpayers. Data were collected through a structured questionnaire and analyzed using descriptive statistics and multiple regression analysis in SPSS and STATA. The Slippery Slope Framework, Fiscal Exchange Theory, and Political Legitimacy Theory provided the theoretical foundation. Results. Regression analysis revealed that only employment status (β = 0.168, p < 0.001) and monthly income (β = 0.099, p = 0.001) significantly influence tax compliance. Age, gender, educational background, household size, and SARS registration did not demonstrate significant effects (p > 0.05). Descriptive analysis revealed pervasive non-compliance: 60.2% of respondents reported failing to pay all taxes owed, and 62.1% admitted to incomplete income disclosure. Theoretical contribution. This study challenges conventional assumptions regarding demographic determinants of tax compliance, demonstrating that structural factors - particularly PAYE withholding mechanisms - outweigh individual demographic characteristics. The findings support the Slippery Slope Framework’s emphasis on power-based enforcement while highlighting that institutional legitimacy deficits, rather than demographics, drive non-compliance. Practical implications. Results indicate that SARS and policymakers must extend interventions beyond demographic targeting to address institutional legitimacy, perceived fiscal reciprocity, and equitable enforcement. Recommendations include extending PAYE-style withholding to additional income sources, enhancing transparency, and developing sector-specific compliance strategies. Originality/value. This study provides the first systematic empirical analysis of demographic determinants of PIT compliance in Mbombela, Mpumalanga, demonstrating that institutional factors merit greater attention than demographic segmentation in compliance enhancement strategies. Sustainable Development Goals (SDGs): SDG 16: Peace, Justice and Strong Institutions; SDG 10: Reduced Inequalities; SDG 8: Decent Work and Economic Growt