How do Australians Think about Tax ?

1. How do Australians Think about Tax ? Valerie Braithwaite Regulatory Institutions Network ANU

2. Presentation Outline Thinking Complexly about Tax – Alive and Well in the Community Statistical Snapshots of What People Think About Tax and Democracy A Model to Guide Understanding of How the Public Engage with Tax Reform

3. Thinking Complexly about Tax 6 tax focused national mail surveys between 1999 and 2005 3 of these surveys tracked Australians responses to the tax reform process that saw the introduction of the goods and services tax (GST) 2000 survey was conducted pre-GST, 2001-2 survey was conducted after the GST came into effect in July 2001, 2005 survey was conducted after the reform process was bedded down

4. Post the 2005 Federal Budget, Taxpayers were Asked: Would the budget tax cuts make you financially better off? • 7% thought they would be somewhat or much better off • 28% thought they’d be a little better off • 52% thought no better off, no worse off • 13% didn’t know

5. Would the tax cuts make the tax system fairer ? • 8% thought more fair • 27% thought a little more fair • 30% thought no difference • 12% thought a little less fair • 22% thought less fair

6. What should the government have done: reduced taxes or spent more on social services/infrastructure ? • 28% Reduced taxes • 13% Depends • 59% Spent more on social services and infrastructure

7. Drivers of attitudes to tax cuts or spending on social services and infrastructure? • Self-interest? A little, not much • Political party identification? A little more, but not much • Values and social goals for the democracy? Yes

8. Comparison with attitudes to GST: Self-interest not very important, values and goals were “squashed” by political identification Conclusion of these studies: The institutions of politics and the media crowd out and homogenize public views and engender helplessness and disinterest in the deliberative process

9. Snapshot Statistics of what Australians Think: How many Australians agree or say yes in 2000, 2002, and 2005 to questions on “value for money”? Do you think the tax you pay is fair given the goods and services you receive from government? 37% 39% 34% Would you prefer to pay less tax even if it means receiving a more restricted range of goods and services? 31% 38% 27% How satisfied are you with the way the government spends taxpayers’ money? 15% 21% 17%

10. Snapshot Statistics of what Australians Think: How many Australians feel oppressed by taxation agreeing with the following in 2000, 2002 and 2005? I would be better off if I worked less given the rate at which I am taxed 31% 29% 26% Paying tax means I just can’t get ahead 28% 29% 29% Paying tax removes the incentive to earn more income 56% 49% 48%

11. Snapshot Statistics of what Australians Think: How many Australians feel a moral obligation to pay tax in 2000, 2002 and 2005 ? Do you think you should honestly declare all your tax earnings? 72% 72% 72% Yes Do you think it is acceptable to overstate tax deductions in your return? 8% 7% 6% Yes Do you think working for cash-in-hand payments without paying tax is a trivial offence? 32% 31% 28% Yes

12. Democratic collective self: a self that expects government to deliver in exchange for our cooperation, an expectation of being respected as a citizen Competitive self: a self that aspires to wealth, power and status in some cases and to a job, family and home in others Moral self: a self that wants to be honest and seen to be honest, as law abiding, as not needing to be fearful of authority, a good person Conclusion: Tax reform in its outcomes and process needs to be respectful of these selves.

13. How is the Democratic Collective Self undermined ?

14. 48 Freemarket 38 40 85 Tax HFHE (L) 2005 Disillusionment 87 Hope 2003 Tax CHFAS 2000 86 0 20 40 60 80 100 Percent agree or strongly agree A comparison of levels of disillusionment with Australian democracy and support for small government and free markets 2000 - 2005

15. 5 Unskilled factory workers 6 9 Farm labourers 9 11 Waitresses 10 24 Trades people 22 23 Small business owners 24 29 Farm owners 29 Tax ATSFONS Tax CHFAS 47 Tax agents and advisors 45 49 Doctors in general practice 51 60 Surgeons 59 73 Senior judges and barristers 64 75 Owner managers 70 78 Chief executives 77 0 10 20 30 40 50 60 70 80 90 Percent paying a bit less or much less than their fair share Perceptions of the degree to which different occupational groups are paying their fair share of tax

17. Trust in Institutions

18. Competitive Self How is it being undermined? It hasn’t although it may be harder to “win” by being law abiding (Hypothesis). Opportunities for investment and prosperity have been high for those who have been able to take advantage of Australia’s favourable economic conditions. Negative relationship to moral obligation. Opportunities for tax minimization and avoidance have been available for those with wealth. Negative relationship to moral obligation. Opportunities for those aspiring to home, family and a good job have been less easily accessed by segments of the population. Negative relationship to moral obligation.

19. Moral Self - How is it being undermined? Imagine that you have to find a tax adviser. What would your ideal tax adviser be like? Would you give a top or high priority to some who is … Honest and offers a no fuss service 85% 82% 85% Good at minimizing tax without taking risks 30% 26% 21% Willing to be aggressive in reducing the tax bill 24% 20% 20%

20. Imagine you are caught for tax evasion – not declaring $5,000 in income or claiming work deductions unlawfully worth $5,000. How would you feel if you were caught ? 60% in 2000 and 60% in 2002 said they were likely or certain to feel ashamed or guilty 8% in 2000 and 8% in 2002 said they were likely to feel angry with the tax office and express that anger 7% in 2000 and 8% in 2002 said they would just shrug it off and not worry too much about it

21. 11 Gameplaying 10 13 5 Disengagement 7 6 57 Resistance 57 55 Tax HEHF (L) 2005 Tax ATSFONS 2001 74 Tax CHFAS 2000 Capitulation 72 73 92 Commitment 94 92 0 20 40 60 80 100 Percent agreement Percent endorsing each motivational posture to Australian Taxation Office 2000 - 2005

22. The Wheel of Social Alignments Braithwaite, Valerie (2009) ‘Tax evasion’ In M. Tonry, Handbook on Crime and Public Policy Oxford: Oxford University Press