Factors affecting tax expenditure report use

The central questions addressed in this paper are: what user related variables affect the use of tax expenditure reports and how do these variables affect report use? To consider report use, three models are drawn from the literature on information utilization, modified, and applied to tax expenditure reporting. Each model is represented by a path diagram which incorporates a distinct set of variables. Path analysis is used to evaluate each of the three models and to construct a single combined model of use. Path analysis of the combined model indicates the usefulness of reports has the largest total effect on level of use. Exogenous variables affecting report usefulness are: quality of report communications, technical quality of report, relevance of report information, fiscal analysis attitude of user, and user’s perception of technical component of tax policy. This study suggests that it is relevant to consider the user’s perception of information in modeling information use and that reports preparers may marginally affect information use.