Innova ITFIP Magazine

The Relationship of Budgeting Resources over Income Tax Compliance

Angel Ortiz García

Xiomara Santiago Rodríguez

Mary Lynne Rivera Rivera

DOI: https://doi.org/10.54198/innova13.02

Keywords: Budgeting, Tax collections, Technology, Human resources,, Tax evasion, Resource-based theory

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Abstract

This research examined the relationship between budgeting resources and income tax compliance of the Puerto Rico Treasury Department from 2000-2020. Tax evasion is a constant problem in Puerto Rico, in which the government obtains less revenue to provide goods and services. The specific problem is that the Treasury Department has limited budgetary resources to promote tax compliance. The justification for this study is that government leaders and tax professionals can validate the importance of adequate budget allocation to tax enforcement agencies to promote tax compliance. The objectives of this study are to identify the relationship between the budgetary resources allocated to the Puerto Rico Treasury Department and tax compliance. This study was exploratory, which used a descriptive and correlative methodology over the budgets and collections of the Department of Treasury for a period of 20 years. Using the resources-based theory, the study analyzed the relationship of technology, administration, and human resources budget assigned to the Puerto Rico Treasury Department over the income tax collections. The findings present a significant relationship between administration and technology budget with a lag effect over tax collections. The study validates the importance of technology to promote efficiency while reducing human resources to maximize income tax compliance. The findings are useful to organizational leaders to promote adequate budgetary resources, especially in technology, to promote organizational performance and reduce tax evasion for the benefit of the economy and community.

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