Institutional Trust and Tax Compliance in Ghana: A PLS-SEM Analysis of Perceived Injustice, Government Performance and Perceived Corruption

This study examines the mediating role of trust in government in the relationship between perceptions of injustice, perceived corruption, perceived government performance, and tax compliance attitudes among Ghanaians. Utilizing Afrobarometer Round 9 data comprising 2,369 observations, the study employs a Partial Least Squares Structural Equation Modeling (PLS-SEM) approach to analyze these relationships. The constructs were measured using comprehensive multi-item scales. The findings reveal significant relationships between perceived corruption, perceived government performance, trust in government, and tax compliance attitudes in Ghana. Perceived corruption was found to negatively impact both tax compliance attitudes and trust in government, underscoring its detrimental effects on public confidence and tax morale. Conversely, perceived government performance positively influenced trust in government and tax compliance attitudes, highlighting the importance of effective and transparent governance in promoting compliance. Moreover, trust in government significantly mediated the relationship between perceived corruption and tax compliance attitudes but did not mediate the effects of perceived government performance or perceptions of injustice. These results underline the critical role of governance quality and public trust in shaping compliance behaviors. The study recommends that the government strengthens anti-corruption efforts by enhancing transparency, establishing robust public accountability systems, and regularly monitoring corruption perceptions. Additionally, improving service delivery and making government performance more visible through clear communication of achievements and resource allocation are essential. Finally, implementing fair tax administration processes and ensuring equitable public service distribution are crucial for fostering public trust and encouraging tax compliance.