Wednesday, October 28, 2015 - 12:30pm to 1:45pm
Location: 
Solarium (room FA2) Falconer Hall - 84 Queen's Park

The James Hausman Tax Law and Policy Workshop Series 

presents 

Erich Kirchler
University of Vienna Faculty of Psychology

Cooperation between Citizens and Tax Authorities

Wednesday, October 28, 2015
12:30 – 2:00
Solarium (room FA2), Falconer Hall
84 Queen’s Park 

How to combat tax avoidance and evasion? The traditional command-and-control approach bases on the assumption that taxpayers take rational egoistic decisions. They consider the probability of audits and the severity of fines in cases of detected evasion and pay taxes only if audit probability is high, if the risk of detection of evasion is high, and if fines are high. Audits and fines are relevant, however, the effect is rather weak. To understand the motives for tax compliance it is necessary to understand taxpayers’ attitudes towards taxes and tax authorities, their knowledge and understanding of tax laws, their personal and social norms, and fairness concerns related to distributive and procedural justice. Besides the application of deterrence measures to combat tax evasion, it is necessary to establish a sense in society that tax evasion and tax avoidance are wrong.

Authoritarian regulation basing on enforcement by coercive power manifestation leads to the impression that tax authorities are approaching compliant and less compliant taxpayers in a uniform way. This undifferentiated approach may cause negative feelings. It may lead to perceptions of arbitrariness, undermine trust and lead to an antagonistic interaction climate. The “slippery slope framework” distinguishes between an antagonistic interaction climate and a synergistic interaction climate and predicts that compliance depends on the interaction climate. These assumptions were tested in laboratory experiments and in survey studies which found high compliance if authorities were described as trustworthy and powerful. Voluntary cooperation was high when authorities were described as trustworthy, and enforced compliance was high when authorities were described as powerful.. 

A light lunch will be served. 

 

For more workshop information, please contact Nadia Gulezko at n.gulezko@utoronto.ca.