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Taxpayers Attitude In Using E-Filing System: Is There Any Significant Difference Among Demographic Factors?

Azleen Ilias, MBA
Accounting Lecturer, Universiti Malaysia Sabah, Labuan International Campus
Postal Address: Jalan Sg. Pagar, 87015, Labuan F.T, MALAYSIA
Author's Personal/Organizational Website: http://www.ums.edu.my/appl/index.php?mod=Publication&action=staffview&sek=spkal&id=629
Email: neelza80@yahoo.co.uk
Azleen is Accounting lecturer and her areas of interest and research are Accounting, Social Reporting, Management Accounting and Business. Her research publications include national and international conference proceedings and journals.

Mohd Zulkeflee Abd Razak, MBA
International Marketing Lecturer, Universiti Malaysia Sabah, Labuan International Campus
Postal Address: Jalan Sg. Pagar, 87015, Labuan F.T, Malaysia
Author's Personal/Organizational Website: http://www.ums.edu.my/appl/index.php?mod=Publication&action=staffview&sek=spkal&id=636
Email: zulkeflee_razak @yahoo.com
Mohd Zulkeflee Abd Razak is International Marketing lecturer and his areas of interest are Marketing and International Marketing, International Business, Retailing and Services Marketing. His research publications are national and international proceedings and journals.

Mohd Rushdan Yasoa’, MBA
Accounting Lecturer, Universiti Malaysia Sabah, Labuan International Campus
Postal Address: Jalan Sg. Pagar, 87015, Labuan F.T, Malaysia
Author's Personal/Organizational Website: http://www.ums.edu.my/appl/index.php?mod=Publication&action=staffview&sek=spkal&id=625
Email: rushdan_andy @yahoo.com
Mohd Rushdan Yasoa’ is Accounting lecturer and his areas of research are Financial Accounting, Management Accounting and Business. His research publications are national and international conference proceedings and journals.

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Abstract

This study employs the Technology Acceptance Model (TAM) to examine taxpayers’ attitude in using e-Filing system. Data are collected from taxpayers in three higher learning institutions in Labuan F.T. The purpose of this study is to examine the differences of taxpayers’ attitude to use e-filing among gender, level of education, experience of handling and learning the system. Besides, this study also examines the relationship between taxpayers’ attitudes and perceived usefulness, perceived ease of use, information system quality, information quality and perceived credibility. The result shows significant differences among experience and non-experience taxpayers in handling and learning e-filing system. Education background of taxpayers has also played an important role in encouraging the attitude of taxpayers to use e-filing. However, the gender of taxpayers provides no difference in terms of their attitude in using and applying the system. In addition, this study found strong relationship between attitude and TAM determinants namely perceived usefulness, perceived ease of use, information system quality, information quality and perceived credibility. The implication of this study suggests that Inland Revenue Board (IRB) should increase and strengthen their awareness program to educate non-experience taxpayers so that it will simultaneously improve the attitude of taxpayers to use this electronic system.

Keywords

Attitude, Technology acceptance model (TAM), E-Filing, Demographic Factors.

Introduction

E-Filing in Malaysia

In year 2005, Inland Revenue Board (IRB) shift to a new paradigm towards e-Filing due to Self Assessment System (SAS) and will focus more on audit field. IRB also decided to aim for paperless. Generally, e-Filing process is more convenience, fast, accurate and secure in terms of payments. There are four steps in e-Filing. First, taxpayers need to enroll and verify a digital signature and MyKad into the reader. Then, they are required to enter the gross earnings, relief and deductions before the system compute automatically. Last but not least, IRB will receive the tax form electronically and verification of tax form return will be sent to taxpayers via email. The most important aspect in e-Filing system is security. As stressed out by IRB CEO, the e-Filing system is secure and difficult to get into anyone’s personal tax file because they need to enter PIN (personal identification number) and a password (The Star Online, April 27th, 2007).

According to IRB, about 657,000 taxpayers filed their Self-Assessment System (SAS) for year 2006 through the e-Filing system compared to year 2005 which were only 189,048 taxpayers (Berita Harian, June 26th, 2007). Thus, the number of taxpayers used this e-Filing system as a method of filing tax return increased by 247%. Furthermore, in terms of tax value that was collected by IRB, it shows a tremendous increase which is RM56.854 billion in year 2005 and jumped to RM65.738 billion in 2006 and jumped again to RM74.703 billion in year 2007. The increase is encouraging from year to year and it shows that IRB is doing its job well by employing the e-Filing effectively.

In general, the main challenge in e-government including e-filing system in Malaysia is the technological challenges, which include issues like standards, data integration, legacy maintenance and privacy as well as security (Mohsin & Raha, 2007). Nonetheless, most of the taxpayers and tax practitioners as well as tax agents in Malaysia provide a positive feedback towards the usage of e-Filing. This has been proved by most of local surveys conducted by many researchers before. Lai et. al (2004) examines the level of technology readiness of Malaysian tax practitioners and their usage intentions towards an e-Filing system. They found that 31.3% of the respondents are somewhat techno-ready and 9.4% are highly techno-ready. At large, tax practitioners are optimistic in new technology and have strong usage intentions; nonetheless, they are wary of the security of Internet technology. The study also revealed that there is a significant positive relationship between the level of technology readiness and the usage intentions towards the e-filing system.

Lai et. al (2005) again examines the usage intentions, attitudes, perceptions and compliance considerations of Malaysian tax practitioners towards the e-filing system. Mail survey was administered on 600 tax practitioners throughout Malaysia. The results report that the respondents have strong usage intentions; nonetheless, they are wary of the security of the e-filing system. The quest for 'speedy tax refunds' ranked as the most important incentive for the respondents to embrace the e-filing system. At the same time, lack of confidence in the electronic administrative capabilities of the tax authority appears to discourage take-up of the e-filing system.

Finally, Aryati et. al (2005) conducts a study to explore the awareness and the usage of e-Filing among tax agents in northern region of Malaysia (Kedah, Perlis and Penang). They also evaluate the respondents’ opinion on the benefits and barriers of using e-Filing. The results showed that the overall mean score for the respondents’ opinion on the benefits of e-Filing is 43.8 compared to the barriers of e-Filing which have overall mean score 35.0. Majority of the respondents realize the advantages of e-Filing may outweigh the disadvantages. This suggests that e-Filing has a great potential of being accepted and used among the tax agents in the future.

Motivation of the Study

It seems clear that the study in the area of TAM among e-Filing taxpayers particularly in Labuan F.T is considered limited. Thus, this study aims to contribute to the knowledge of information technology field. Due to the problem on using e-Filing, taxpayers were uncomfortable with e-Filing as some of them are unfamiliar with electronic transactions and some said they were not computer savvy (The Star, May 4th, 2006). In addition, most of taxpayers’ were very concerned if IRB directly changes the whole manual tax return process to e-Filing because of their inability to use Internet and less computer skill. Besides, slow response to e-Filing was mainly because of people’s habit of completing their assessment at last minute. On the other hand, some of them are difficult to accept a new technology because they are very concern about the security (The Star, December 31st, 2003). In turn, this resulted in low usage of electronic system. Therefore, it is very imperative to study the behavior intention of taxpayers based on their demographic factors in utilizing this e-filing system because this system will be used regularly every year.

Significant of the Study

Through this study, the main reason of taxpayers’ intention in using e-Filing will be explored. In addition, this study will assist Lembaga Hasil Dalam Negeri (LHDN) or Inland Revenue Board (IRB) to improve e-Filing performance according to TAM determinants and in line with the Government’s Information Technology Policy. Based on the result of this study, it is expected there are more trainings and seminars might be conducted in order to improve e-Filing usage and compliance. However, this system will be fully implemented after it is widely accepted (Rahimah Abdullah, 27th April 2006). Besides, the IRB chief executive officer and director-general have stated that the process of upgrading e-Filing system services for taxpayers will improve the level of taxpayers’ compliance. Consequently, the intention of taxpayers will be improved positively and in turn it will increase their compliance toward the IRB.

Objective of the Study

The objective of this study is twofold:

1. To determine the differences of taxpayers’ attitudes among gender, level of education, experience of handling and learning e-filing system.

2. To examine the relationship between taxpayers’ attitudes and perceived usefulness, perceived ease of use, information system quality, information quality and perceived credibility.

The remainder of this paper is organised as follows. A review of related literature on technology acceptance model and research questions is discussed. Next, the methodology employed in this study, research instruments used and data analysis method involved are described. Finally, the empirical results and discussion of the study are drawn

Literature Review

Technology Acceptance Model

The TAM adopts the theory of reasoned act (TRA) model to explore the IT acceptance. TAM and TRA, both of which have strong behavioral elements, assume that when someone forms an intention to act, they will be free to act without limitation (Davis. et al., 1989). In addition, Davis et al., (1989) also stated that TAM indicates both perceived usefulness (PU) and perceived ease of use (PEOU) as key independent variables that determine or influence potential users’ attitudes toward IT intention of use.

This study also used DeLone and McLean model of information system success (2003) consists of information system quality (ISQ) and information quality (IQ). Another new dimension is perceived credibility of a computer system developed by Wang (2002) and Chang et al. (2005).

Previously, Wang (2002); Chang et al. (2005); Hung. et al., (2006); and Fu et al., (2006) applied TAM in their study on tax filing methods especially in Taiwan. However, most of researchers construct hypothesized affect the use of Internet tax filing indirectly through their affect on perceived usefulness (PU), perceived ease of use (PEOU), information system quality (ISQ), information quality (IQ), and perceived credibility (PC) toward attitudes of using (ATT) and behavior intention (BI).

However, there has been little study on TAM and DeLone and McLean model particularly in e-Filing system. Nevertheless, Lai et al. (2004) examined the level of technology readiness of Malaysian tax practitioners and their usage intention towards an e-Filing system. They found a significant positive relationship between the level of technology readiness and the usage intention towards the e-Filing system. Besides, Hanudin et al. (2006) has applied TAM particularly on the intention to use the SMS as a mode for banking transactions. According to this study, perceived expressiveness, perceived usefulness and perceived ease of use are important determinants of intention to use SMS banking among male respondents.

Technology Acceptance Model (TAM) Determinants

Attitude

Attitude is defined in terms of individual preferences and interests regarding the use of Internet tax-filing system. The measurement is adapted from Davis et al. (1989). Attitude is one of important determinant in increase the level of behavior intention among taxpayers. This can be supported by Chang et al. (2005) that stated as attitude has a significant impact on behavior intention (BI) of using the system.

Perceived Usefulness

Perceived usefulness is defined as the degree of taxpayers’ believes from using Internet tax-filing system that would enhance their job performance and the measurement adapted from Davis (1989). In addition, Davis (1989) has stated that perceived usefulness was found to have a strong influence on people’s intentions. However, Chang et al.(2005) study has found that perceived usefulness has no direct impact on behavior intention but has significant on attitude, which consequently has an impact on behavior intention of using the system.

Perceived Ease of Use

Perceived ease of use was defined as the degree to which a user aspects the use of Internet tax-filing system to be free of effort and was measured by Davis (1989). In Davis (1989), perceived ease of use which test to had a smaller but significant affect that subsided over time. According to Chang et al., (2005), perceived ease of use also found to have a significant impact on attitude, thus affects behavior intentions.

Information System Quality

According to DeLone and McLean (2003), information system quality is associated with the issue of whether the technical components of delivered is provide the quality of information and service required by stakeholders. Besides, information system quality was defined by the degree to which the technical components of Internet tax-filing provide the quality information and service required by users (Chang et al., 2005).

Information Quality

Based on Chang et al. (2005), information quality has been defined by the degree to which users are provided with quality information regarding their needs. Information quality also represents the users’ perception of the output quality generated by an information system and includes such issues as the relevance, timeliness and accuracy (DeLone and McLean, 2003).

Perceived Credibility

Perceived credibility is defined as the extent of users’ confidence in the Internet tax-filing system’s ability to protect the user’s personal information and security. This measurement was adapted from Wang (2002). According to Chang et al. (2005), a credible website needs to safeguard personal information from unauthorized access or disclosure, accidental loss and alteration or destruction. In Lai et al. (2004) study, some of the respondents specifically expressed that they would only use the e-Filing system if the IRB could assure them that the e-Filing system were safe and secure, and if the usability and reliability of the e-Filing system were fully tested and well documented.

Hypotheses

H0a: There is no significant difference of attitudes among gender towards E-filing system.

H1a: There is significant difference of attitudes among gender towards E-filing system.

H0b: There is no significant difference of attitudes among different level of education towards E-filing system.

H1b: There is significant difference of attitudes among different level of education towards E-filing system

H0c: There is no significant difference of attitudes between experience and non-experience towards E-filing system

H1c: There is significant difference of attitudes between experience and non-experience towards E-filing system

H0d: There is no significant difference of attitudes intention between learner and non-learner towards E-filing system

H1d: There is significant difference of attitudes intention between learner and non-learner towards E-filing system

H0e: There is no relationship between attitude and each determinant of Technology Acceptance Model (TAM)

H1e: There is strong relationship between attitude and each determinant of Technology Acceptance Model (TAM)

Research Methodology

Study Sampling Procedure

The population of this study covered e-Filing users from three higher learning institutions in Labuan F.T. Before data collections were carried out, phone calls were made to each institution in order to ensure total number of academic and administration staffs. Respondents consist of experience and non-experience individual taxpayers from Universiti Malaysia Sabah (UMS), Institut Latihan Perindustrian (ILP) and Pusat Matrikulasi Labuan (PML). We have distributed 80 questionnaires for every institution and the total samples are 240 respondents. Finally, only 100 respondents completed and returned the questionnaires, which represents about 42.0% response rate.

Instrumentation

The questionnaire has two sections namely TAM determinants and demographic section. The instrument of this study is based on Chang et. al (2005). It presents a new set of instrument with some modification according to seven variables using seven-point Likert scale. The variables consist of behavior intention, attitude, perceived usefulness, and perceived ease of use (Davis, 1989); information system quality and information quality (DeLone and McLean, 1992) and perceived credibility (Wang, 2002). Demographic section consists of gender, education level, job, time of computer using, experience of handling e-Filing and experience of learning e-Filing.

Result

Data Analysis and Results

internet-banking-commerce-Demographic-Data

Table 1: Demographic Data

Based on Table 1 below, a total respondent of gender was fairly accounted (50%:50%). Most of the respondents are degree holder (67%); followed by certificate holder (14%), lower than STPM (8%), STPM (6%) and diploma (5%). Besides, 63% of the respondents are academician and 13% are non-academician. It is followed by supporting staff (24%). In addition, about 35% of respondents claimed that they used computer more than 28 hours per week. Most of respondents do not have an experience in handling and learning e-Filing system. About 33% of them have experience in handling e-Filing system and 36% have learning experience through IRB courses and seminars.

internet-banking-commerce-Reliability-Analysis

Table 2: Reliability Analysis

Table 2 presents the Reliability Analysis, Cronbach’s Alpha reliability coefficients of the six determinants and behaviour intention (dependent variable). All the determinants were all above 0.7. It seems that this study provides quite reliable instruments because the score is higher than Chang (2005). For example, the behaviour intention is 0.96 as compared to 0.94; attitude = 0.96 (0.94); and perceived credibility = 0.80 (0.70). Perceived credibility is a new determinant and presents more reliable compared to previous study. Reliability less than 0.6 is considered poor, those in the 0.7 ranges, acceptable, and those 0.8 good (Sekaran, 2000). It is of evidence that the Cronbach’s alpha value for the seven factors in this study ranged from 0.8 to 0.97. Therefore, the internal consistency reliability of the measures used in this study can be considered to be good. reject H1a because the attitudes of taxpayers towards e-filing usage are insignificant across gender. It seems that taxpayers’ attitude towards the usage of e-filing will be the same between male or female.

internet-banking-commerce-Difference-Attitude-Gender

Table 3: The Difference of Attitude among Gender

internet-banking-commerce-ANOVA-Table

Table 3.1: ANOVA Table

internet-banking-commerce-Difference-Attitude-among-Education-Level

Table 4: The Difference of Attitude among Education Level

internet-banking-commerce-ANOVA-Table

Table 4.1: ANOVA Table

From this result, it shows that taxpayers’ attitude to file the tax return electronically is different among each education level of taxpayers. It supported by F ratio=4.567, p<0.05. We can reject the H0b and accept H1b that states the attitude on e-filing is different across different level of education. This finding recapitulates that education level plays an important role in increasing and improving attitude of taxpayers to file their tax return through electronic system. The highest mean are diploma and certificate level (Table 4). Taxpayers with the different level of education might have different attitude because some of them have an exposure and high awareness in using e-Filing system due to their education background. They also assume that the difficulty of manual filing of taxation can be reduced when employing this e-filing. This finding is supported by Mohsin & Raha (2007) which avers that household with high incomes and higher levels of education actively use the e-filing services.

internet-banking-commerce-Handling-E-filing-System

Table 5: The Difference of Attitude between Experience and Non-Experience Taxpayers in Handling E-filing System

internet-banking-commerce-ANOVA-Table

Table 5.1: ANOVA Table

In this study, we also found that there is significant difference in attitude between experience and non-experience taxpayers’ in handling e-filing system. Given that F=8.326 and p<0.05, we can reject the null hypothesis H0c and accept the H1c because the attitude of taxpayer is different across experience of handling e-filing system. Most probably, taxpayers that have experience in handling and exercising of e-filing will be able to understand the overall e-filing system much better in order to influence their attitude in using e-filing.

internet-banking-commerce-Learning-E-filing-System

Table 6.1: The Difference of Attitude between Experience and Non-Experience Taxpayers in Learning E-filing System

internet-banking-commerce-ANOVA-Table

Table 6: ANOVA Table

Besides experience of handling e-filing, experience of learning the system also plays a role in influencing and generating the attitude of taxpayers. Given that p<0.05, we can reject the H0d and accept the H1d which states the attitude of using the e-filing system is different between learner and non-learner. We can summarize that the learning experience will provide taxpayers a confidence in getting through the system from the beginning until the payment process via the online banking. Eventually, it will create a good attitude and intention. However, non-learners will assume differently if they are not receiving any exposure regarding the system.

Taxpayers need to have a knowledge and exposure from IRB or professional body in encouraging them to e-file their tax returns. Obviously, IRB has strengthened the understanding of e-Filing usage among taxpayers through seminar, workshop and any related event. For instance, IRB and the Malaysian Institute of Accountants (MIA) have jointly organised a Taxpayers' Awareness Day to teach and assist taxpayers' on managing their taxes. Through this programme, taxpayers will learn about income tax relief, rebates as well as how to use the e-Filing method. (the Star, April 3rd, 2008).

internet-banking-commerce-measuring-taxpayers-attitude

Table 7: Relationship between six determinants of measuring taxpayers’ attitude

Table 7 presents the correlation for each determinant in influencing taxpayers’ attitude to use e-filing system. Each determinant has strong relationship towards ATT (attitude) at significant level 0.01. The highest correlation is between PU and ATT (0.807) which indicates that the perceived usefulness has a strong influence on taxpayers’ attitude. This finding is supported by Chang et al. (2005) which found that perceived usefulness has significant impact on attitude, which consequently has an impact on behavior intention of using the system. Meanwhile, the lowest correlation is between PC and ATT (0.575). Most probably, this moderate relationship explains that perceived credibility is not much influencing the attitude of taxpayers because most of them are quite concern about security of the system (Lai et al., 2005).

Conclusion

This study attempts to examine the differences of taxpayers’ attitude to use e-filing among gender, level of education, experience of handling and learning the system. Besides, this study also examine the relationship between taxpayers’ attitudes and perceived usefulness, perceived ease of use, information system quality, information quality and perceived credibility The result shows significant differences among experience and non-experience taxpayers in handling and learning e-filing system. Education background of taxpayers has also played an important role in encouraging the attitude of taxpayers to use e-filing. Meanwhile, the gender of taxpayers provides no difference in terms of their attitude in using and applying the system. Meanwhile, this study found strong relationship between attitude and TAM determinants namely perceived usefulness, perceived ease of use, information system quality, information quality and perceived credibility. The implication of this study suggests that IRB should increase and strengthen their awareness program to educate non experience taxpayers so that it will simultaneously improve the attitude of taxpayers to use this electronic system.

To increase the generalization of this finding, future research might employ a larger sample so that it can be generalized to the whole country. Furthermore, besides acquiring the data from the questionnaire, the interview with selected taxpayers can be conducted to cater the other issues related to the effectiveness and efficiency of e-filing.

References

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