Tax Morale Depreciation And Entrepreneurship Practice Outside The Formal Economy Framework: which relation?: Exploratory Study In Sidi-AMMAR Algeria

Abderrahime  Abdellaoui; Tarek DJEDDI

doi:10.54960/jfcg.v1i1.5

Authors

Abderrahime Abdellaoui National Higher School of Statistics and Applied Economics (ENSSEA: ex-INPS)
Tarek DJEDDI National Higher School of Statistics and Applied Economics (ENSSEA: ex-INPS)

DOI:

https://doi.org/10.54960/jfcg.v1i1.5

Keywords:

Entrepreneurial, Informal economy, Tax morale

Abstract

This paper aims to explore the nature of the relationship between the tax morale of Algerian entrepreneurs and their practice of entrepreneurship outside the framework of the formal economy. Given the difficulty of identifying the community of the study accurately and the absence of its database, the researchers relied on non-random sampling - the purposive sample- because they allow the selection of sample members to serve the purposes of the research. Thus, face-to-face interviews were conducted with 22 micro-enterprise owners in Sidi Ameur city in the Wilaya of M'Sila.

The study concluded that the asymmetry between formal institutions (the codified laws and regulations) and informal institutions (Community norms, values) in Algeria has caused a decline in the tax morale of entrepreneurs. This contradiction is due to the increase of corruption in the public sector coincided with the bureaucratic weight, as well as deterioration in the risk of detection and punishment as a result of the corruption of public sector employees.

The added value of this research paper is mainly to highlight the importance of analysis based on institutional theory in explaining the phenomenon of the informal economy, in particular the clarification of the inverse relationship between tax morals and the volume of entrepreneurial activity practiced outside the framework of the formal economy. It has also contributed to providing a modern vision based on analysis of the phenomenon at several levels, rather than relying on traditional bilateral analysis (a formal economy and an informal economy).

As for the recommendations, the study has produced a number of recommendations aimed at reducing the asymmetry between the formal institutions and the informal institutions, which will enhance the tax morale, which in turn will contribute to the integration of entrepreneurial activities outside the framework of the formal economy.

Downloads

Download data is not yet available.

References

Mohammed Ali Eljoudi. (2015). Towards the development of entrepreneurship through entrepreneurship education: A study on a sample of students from the University of Djelfa. Unpublished PhD thesis, Faculty of Economic Sciences, Commercial Sciences and Management Sciences, Biskra. Page "A"

Hernando de Soto. (2000/2009). Puzzle Capital: Why Capitalism succeed in the West and fails everywhere else? (First edition). (Translator, Sayed Kamal) Cairo, Egypt: Egyptian General Book Organization. PP. 01-04.

Hernando de Soto. (1989/97). The Other Way: Hidden Wealth in the Third World (First Edition). (Translator, Shawky Galal) Cairo, Egypt: Al Ahram Center for Translation and Publishing. Page 10.

International Labour Organization. (2015). Recommendation on the transition from the informal economy to the formal economy. International Labor Office, Geneva, Switzerland. P 2.

Conseil National Economique et Social, Rapport : Le Secteur Informel Illusions et Réalités. Bir-Mourad-Rais Wilaya d’Alger: CNES, 2004 , PP. 106-108.

Babou, O., & Adair, P., L’economie Informelle A Tizi-Ouzou (Algerie): Determinants, Segmentation Et Mobilite. XXXIémes Journées du Développement ATM 2015, 3,4,5 et 6 juin 2015 à Rouen. France, 2015. Available : (http://www.ummto.dz/IMG/pdf/Babou.pdf)

General Secretariat of the Government, the law guiding the development of small and medium enterprises, the Official Gazette of the Republic of Algeria, the official press, (the second number) 11, January 2017, P 06.

Chen, M. A. (2012). The informal economy: Definitions, theories and policies. Women in informal economy globalizing and organizing: WIEGO Working Paper, 1.‏ P 04.

Williams, C. C., Shahid, M. S., & Martínez, A. (2016). Determinants of the level of informality of informal micro-enterprises: Some evidence from the city of Lahore, Pakistan. World Development, 84, 312-325.‏

Colin , W. C., & Shahid, M. S., Informal entrepreneurship and institutional theory: explaining the varying degrees of (in) formalization of entrepreneurs in Pakistan. Entrepreneurship & Regional Development, 28(1-2), 2016, PP. 1-25.PP 01 F.

The WB. (16-08-2017), DOING BUSINESS, Available : http://www.doingbusiness.org/data/exploreeconomies/algeria.

Schneider , F., & Williams , C. (2013). The Shadow Economy. London: The Institute of Economic Affairs. P 38.

Ostapenko, N., & Williams, C. C. (2016). Determinants of entrepreneurs' views on the acceptability of tax evasion and the informal economy in Slovakia and Ukraine: an institutional asymmetry approach. International Journal of Entrepreneurship and Small Business, 28(2-3), 275-289.‏ P 277.

Jie, S. W., Tat, H. H., Rasli, A., & Chye, L. T. (2011). Underground economy: definition and causes. Business and Management Review, 1(2), 14-24.‏ P18.

Schneider , F., & Williams , C. (2013). The Shadow Economy. London: The Institute of Economic Affairs. P 42.

Alm, J., & Torgler, B. (2006). Culture differences and tax morale in the United States and in Europe. Journal of economic psychology, 27(2), 224-246.‏ P 224.

Schneider , F., & Williams , C. (2013). The Shadow Economy. Op cit, P 43.

Williams, C. C., & Horodnic, I. A. (2016). Tackling the undeclared economy in the European Union: an evaluation of the tax morale approach. Industrial Relations Journal, 47(4), 322-340.‏ P 322.

Saif al - Islam Saad Omar. (2009). Al-moujaz in the scientific research approach: in education and humanities. Dar al-Fikr, Damascus, Syria, 2009, p. 97.

Ibid, P 115.

International Labor Office: Employment Policy Department. (2013). Measurement of the informal economy: addressing statistical challenges. International Labor Office, The Informal Economy and Decent Work: A Policy Resource Guide to Support the Transition to the Organized Theme (pp. 1-19). Geneva, Switzerland: International Labor Organization. P 04.

Colin , W. C., & Shahid, M. S., Informal entrepreneurship and institutional theory: explaining the varying degrees of (in) formalization of entrepreneurs in Pakistan. Entrepreneurship & Regional Development, 28(1-2), 2016, PP. 1-25.P 14.

Karaca, C., The Comparison of the Shadow Economy in Turkey and European Countries, Comparative Economics and Regional Development in Turkey , 2016, (pp. 73-105). doi:DOI: 10.4018/978-1-4666-8729-5.ch004 , P 76.

Rothenberg, A. D., Gaduh, A., Burger, N. E., Chazali, C., Tjandraningsih, I., Radikun, R., ... & Weilant, S. Rethinking Indonesia’s Informal Sector. World Development, 2016, 80: 96-113. P 98.

Friedrich Schneider and Dominick Ansit, hide behind the shadows: the growth of the hidden economy, economic issues 30, 2002 page 08.

Tanzi, V, The Shadow Economy, Its Causes and Its Consequences. International Seminar on the Shadow Economy Index in Brazil. Rio de Janeiro. Brazil.: Brazilian Institute of Ethics in Competition, 2002, PP 05 F.

Colin , W. C., & Shahid, M. S.. Informal entrepreneurship and institutional theory: explaining the varying degrees of (in) formalization of entrepreneurs in Pakistan, Op cit, P 08.

Ibid., PP 3 F.