The Australian National University, Regulatory Institutions Network (RegNet)
Abstract
In recent years, the Australian Taxation Office has gone to some pains to present itself as
a responsive, cooperative, almost friendly, bureaucracy. At the same time, however, the
Tax Office has also publicized its ongoing efforts to get tougher on those citizens who
evade tax. The combined effect of these campaigns is to send the message that while the
Tax Office prefers to interact with taxpayers in a cooperative, and non-coercive way, it is
also ready and willing to take tougher action when this is called for. In many respects this
dual track approach is sensible. Tax collection depends to a large extent on voluntary
compliance. A regulatory approach that expresses trust in honest taxpayers, as well as a
preparedness to firmly deal with dishonest taxpayers, can do much to boost compliance.
However, firm enforcement is not as easy as it seems. The effectiveness of prosecution is
undermined, by a lack of concern – whether real or perceived – for procedural injustice,
the informal effects of formal penalties, and possible enforcement biases. The first part of
this paper describes the Tax Office’s dual approach to tax collection. The second outlines
the benefits of this approach, while the third outlines some of the possible pitfalls of such
an approach, drawing on interviews with Australians who have been prosecuted and
imprisoned for tax offences. The fourth section suggests some of the implications for
compliance activities in the tax arena, and the final section explores the relevance of this
study for the responsive regulatory theory on which Tax Office practice is partly based
