Review of related literature Tax Compliance There are several factors that affect how a person complies with the different conditions in paying their taxes

Review of related literature
Tax Compliance
There are several factors that affect how a person complies with the different conditions in paying their taxes. Most of the views are about the government.
The viability of the contract between taxpayer and the government is very dependent on the perception of the taxpayer on government (Damayanti dan Supramono, 2012). If taxes paid and public services provided by the government is considered by the taxpayer equitable, taxpayers might tend to comply with tax laws and this has a positive effect on tax compliance (Feld dan Frey, 2002; Torgler, Demir, MacIntyre, dan Schaffner, 2008). It implies that the taxpayer’s perception on the government can greatly affect his or her compliance in paying taxes. If the government provides great services, taxpayers are most likely to comply. Moreover, according to Kohler et al., (2013) dan Turner (2005) successfully distributed that the level of tax compliance is more influenced by the taxpayer trust in the government, especially against the tax system.
Importance and Purpose of Paying Taxes
Taxation plays a great role in a country’s economy. There are numerous reasons on why people should adhere to paying their taxes. (Carmel, 2010) listed different ways in which government can use taxation in a modern economy.
1. Revenue generation- taxation is used by the government to raise revenues for its operations, infrastructure, welfare and education defense.
2. Behavior discouragement- also referred to as social engineering, the purpose of this is to discourage people from antisocial behavior and is often done heavily taxing the commodity thereby increasing its price.
3. Reducing inequality- tax money is used to serve the weaker sections of the society through the welfare programs.
4. Resource redistribution- can be used to transfer resources from one section of society to another section of the society.
5. Protecting local industry- local industries are normally protected by the government through the use of heavy import tariffs. This makes the imported goods more expensive that the local goods and thereby encouraging the production of local goods.