The role of trust in nurturing compliance: a study of accused tax avoiders

Why an institution’s rules and regulations are obeyed or disobeyed is an important question for regulatory agencies. This paper discusses the findings of an empirical study that shows that the use of threat and legal coercion as a regulatory tool—in addition to being more expensive to implement—can sometimes be ineffective in gaining compliance. Using survey data collected from 2292 taxpayers accused of tax avoidance, it will be demonstrated that variables such as trust need to be considered when managing noncompliance. If regulators are seen to be acting fairly, people will trust the motives of that authority, and will defer to their decisions voluntarily. This paper therefore argues that to shape desired behaviour, regulators will need to move beyond motivation linked purely to deterrence. Strategies directed at reducing levels of distrust between the two sides may prove particularly effective in gaining voluntary compliance with an organization’s rules and regulations

Who me? I didn't do anything wrong: Trust, resistance and compliance among tax scheme investors.

Conference paperWhy an institution’s rules and regulations are obeyed or disobeyed is an important question for regulatory agencies. This paper discusses the findings of an empirical study that shows that the use of threat and legal coercion as a regulatory tool—in addition to being more expensive to implement—can sometimes be ineffective in gaining compliance. Using survey data collected from 2292 taxpayers accused of tax avoidance, it will be demonstrated that variables such as trust need to be considered when managing non-compliance. If regulators are seen to be acting fairly, people will trust the motives of that authority, and will defer to their decisions voluntarily. This paper therefore argues that to shape desired behavior, regulators will need to move beyond motivation linked purely to deterrence. Strategies directed at reducing levels of distrust between the two sides may prove particularly effective in gaining voluntary compliance with an organization’s rules and regulations

Preliminary findings from 'the Australian tax system survey of tax scheme investors'

Between January and July 2002, researchers at the Centre for Tax System Integrity conducted a national survey of 6000 Australian taxpayers involved in tax planning schemes. According to the Australian Taxation Office (Tax Office) scheme investments were largely funded through tax deductions and relatively little private capital was at risk. The Tax Office therefore believed that these schemes exploited loopholes in the tax law and were designed in such a way to avoid tax. The anti-avoidance provisions of Part IVA of the Income Tax Assessment Act were applied to scheme related investments and action was first taken against investors in 1998 to recover the tax owing. Approximately 42 000 investors were issued with amended assessments telling them that they had to pay back taxes, interest and appropriate penalties. Specific issues of interest to the survey researchers were scheme investors’ views of the Tax Office, the Australian tax system and how they believed the Tax Office dealt with the schemes issue. The survey was also designed to identify the possible reasons why taxpayers invested in tax minimisation schemes, why there was such widespread taxpayer resistance against the Tax Office’s debt recovery procedures, and perhaps more importantly, whether the aggressive tax planning market in Australia is supply or demand driven. This report provides a descriptive analysis of some of the more important findings from the survey, followed by a discussion of the key findings and their implications

Police and community cooperation in counter-terrorism: evidence and insights from Australia

Effectively engaging the Muslim community is a challenge for police given many Muslims feel unfairly targeted by counter-terrorism policies and laws because of their faith. This paper explores how such perceptions influence the willingness of Muslims to voluntarily cooperate in counter-terrorism efforts, drawing on data collected from Muslims living in Australia. We test whether procedural justice policing can help buffer this perception of being targeted as a security threat and whether it can enhance Muslim's willingness to cooperate with police. Efforts by the Australian Federal Police to engage Muslim communities in Australia are also examined. The implications of the results for community-based approaches to counter-terrorism are discussed

Aggressive tax planning: differentiating those playing the game from those who don't

The study reported in this paper examined a group of Australian taxpayers who have expressed a preference for an aggressive tax agent. The study attempted to understand how high-risk taxpayers and high-risk practitioners form their partnerships by examining aggressive taxpayers. attitudes and perceptions of the Australian tax system. Data were taken from the Community Hopes, Fears and Actions Survey, which tested a random sample of 2040 Australian taxpayers. Results from a series of independent sample t-tests revealed that there are a number of important differences between aggressive. and .non- aggressive. taxpayers. Finally, a stepwise discriminant function analysis was used to determine which variables can most effectively differentiate aggressive taxpayers from other taxpayers. The best predictive model obtained from this analysis indicated that taxpayers involved in aggressive tax planning tend to have higher family incomes and are more status-oriented than other taxpayers. They are also more likely to blame the Australian Taxation Office (Tax Office) if caught for a tax offence, are more likely to be vindictive towards the Tax Office as a result, and are more likely to adopt a resistance posture towards the Tax Office. Not surprisingly, taxpayers with an aggressive tax agent are more likely to be game-players than other taxpayers. These findings are discussed in the regulatory context. Possible solutions for how tax authorities might deal with this high-risk group of taxpayers are suggested

A user's guide to 'the Australian tax system survey of tax scheme investors'

Between January and July 2002, researchers at the Centre for Tax System Integrity conducted a national survey of 6000 Australian taxpayers involved in tax planning schemes. According to the Australian Taxation Office (Tax Office) scheme investments were largely funded through tax deductions and relatively little private capital was at risk. The Tax Office therefore believed that these schemes exploited loopholes in the tax law and were designed in such a way to avoid tax. The anti-avoidance provisions of Part IVA of the Income Tax Assessment Act were applied to scheme related investments and action was first taken against investors in 1998 to recover the tax owing. Approximately 57000 investors were issued with amended assessments telling them that they had to pay back taxes, interest and appropriate penalties. Specific issues of interest to the survey researchers were scheme investors’ views of the Tax Office, the Australian tax system and how they believed the Tax Office dealt with the schemes issue. The survey was also designed to identify the possible reasons why taxpayers invested in tax minimisation schemes, why there was such widespread taxpayer resistance against the Tax Office’s debt recovery procedures, and perhaps more importantly, whether the aggressive tax planning market in Australia is supply or demand driven. This report provides the reader with a guide to using and analysing the survey findings. More specifically, it discusses the methodology of the survey process and presents the scales used to measure various constructs. Also presented at the back of the report is a codebook that details the frequencies, means and standard deviations to each question of the survey

Tax morale in Australia: what shapes it and has it changed over time?

Why citizens pay their taxes voluntarily is an important question for tax administrations worldwide. Some believe it is because taxpayers are deterred from tax evasion out of a fear of being caught or penalised. Others, in contrast, suggest that factors such as the level of tax morale one has (that is, the intrinsic motivation one has to pay their tax) affects compliance behaviour. While there have been numerous empirical studies published that have explored the role of deterrence on tax compliance behaviour, very few studies have explored the concept of tax morale in any detail. This study therefore attempts to rectify this gap in the literature. If tax morale is important in determining compliance behaviour, as several researchers have suggested, then it is also important to understand what might affect one’s level of tax morale. The specific aim of this paper will be to identify factors that shape or have an impact on tax morale. Using data collected from the Australian wave of the 1981 and 1995 World Values Survey, this study will demonstrate that factors such as trust and moral beliefs play an important role in shaping tax morale in Australia. Further, it will be shown that tax morale has increased significantly in Australia since the early 1980s, and that it has done so at a faster rate than many other OECD countries. Possible explanations for this increase will be discussed

Dull compulsion or perceived legitimacy? Assessing why people comply with the law in Nigeria

Do people living in societies rife with police corruption comply with the law because they perceive police as legitimate or because of their feelings of endemic powerlessness (i.e., what Tankebe (2009) refers to as dull compulsion)? Prior studies have shown that compliance is driven primarily by perceptions that authorities and their laws are legitimate and entitled to be obeyed. Using cross-sectional survey data collected from Southwest Nigeria, this study found that perceptions of police effectiveness and procedural justice were related to Nigerians’ self-reported compliance with the law. Importantly, and unexpectedly, neither dull compulsion nor perceptions of police legitimacy were related to Nigerians’ self-reported compliance behaviour. The implications of these findings for policing in postcolonial African societies are discussed

Procedural justice and Australian environment : the case of the Wonthaggi water desalination plant

Drier conditions in Australia have compelled governments to implement various projects to address current or impending water shortages. Such projects have not always been popular with the local community who are directly affected by this infrastructure, with \u27procedural justice\u27 emerging as a critical issue. This paper analyses issues of public perceptions of \u27procedural justice\u27 in implementing environmental projects in regional areas, in the context of the recently approved desalination plant in the regional Victorian town of Wonthaggi. Drawing on both qualitative and quantitative data from a survey of 316 Wonthaggi residents, we show that one of the major predictors of residents\u27 resistance toward accepting the building of the desalination plant was explained by perceptions of procedural injustice. We further argue that inadequate attention to the particular political history of the region has compounded the sense that the plant implementation has been unfair. Attention to such political histories is vital to avoiding conflict with local stakeholders and to the successful and ethical implementation of development projects in regional areas.<br /