A conceptual paper on perceived fairness and tax compliance among local traders in Ghana: Does tax legitimacy, institutional trust, and business performance matter?

This conceptual paper develops an integrated framework to explain how perceived fairness influences tax compliance behavior among local traders in Ghana. Drawing on equity theory, fiscal exchange theory, and trust theory, the framework proposes that perceived fairness affects compliance intentions both directly and indirectly through tax legitimacy. Tax legitimacy is conceptualized as a mediating mechanism through which taxpayers’ perceptions of fairness translate into greater willingness to comply. The framework further proposes that business performance and institutional trust moderate the relationship between perceived fairness and tax compliance, such that the strength of this relationship varies according to traders’ economic circumstances and confidence in public institutions. By integrating these theoretical perspectives, the paper extends tax compliance research beyond predominantly enforcement-based explanations and highlights the importance of fairness, legitimacy, and institutional confidence in emerging-economy contexts. The framework generates six testable propositions and provides a basis for future empirical investigation. Although the conceptual design precludes immediate empirical generalization, the proposed relationships offer useful directions for testing across diverse institutional and economic settings. The framework also provides policymakers and tax administrators with insights for strengthening voluntary compliance and revenue mobilization through fairer tax practices, enhanced legitimacy, and institutional trust.