Paying tax (and death) could be the only certainty in life, but its fairness is suspect
Wednesday October 18 2017
We need to find out more about how people really do think about taxes around the world and to tailor messages and framing accordingly. PHOTO | FILE
Opinion polls can tend toward triviality. Either they tell us what we already know, or they surprise us with results that they do not explain, leaving us wondering whether the results can be believed at all.
This is not uniformly true, especially where the choices are clear-cut and a choice has to be made: a poll of voters on candidates for elected office can reveal some important and reliable information.
But many polls ask respondents about things they may have never thought of before, and over which they have no genuine choices to make. Because they ask general, often abstract, questions rather than positing clear scenarios or vignettes, they are subject to bias due to question wording and concept framing.
In these cases, poll results can leave us puzzled. While such polls do not give us answers, however, they can help us to think about the right questions to ask. This is the conclusion I draw from the surprising results of a recent survey of citizens in G20 countries on tax matters.
This survey was conducted on behalf of various international professional accounting associations. On some level, its purpose seems to be to show that accountants are trustworthy, whereas politicians are not (this is an actual finding, though it would be interesting to know whether recent events in South Africa have altered this perception).
The survey claims to be broadly representative of income classes in the 20 countries surveyed, with nearly a third of respondents in the lowest income class, but the fact that income was seemingly self-reported and the survey was carried out online does raise questions about whether it captures low-income views as well as it purports to.
Fiscal contract
Having said that, there are some quite fascinating results which, if true, suggest that progressive reformers interested in equitable and efficient tax systems have their work cut out for them.
First, it is an article of faith among many advocates working on tax and budget issues that such matters are fundamentally about fairness and our moral and ethical obligations as citizens.
Even the idea of a “fiscal contract,” which may appear to be somewhat transactional, is really transcendent: while the contract specifies the roles of citizen and state, it rests on normative commitments related to what citizens should do, not the kind of rational cost-benefit analysis we use to purchase items in the market.
It is interesting to see, therefore, that in most countries, more respondents see paying taxes as “mainly about” laws and regulations, rather than morals and fairness.
This varies considerably across countries. In Indonesia, for example, roughly 70 per cent (net) of respondents agree that taxes are about both laws and regulations and morals and fairness.
Italy is the only country where significantly more respondents see taxes as a matter of fairness than laws. On the other hand, in Brazil, Mexico, Russia and South Africa, net support for the idea that paying taxes is about morals and fairness is well under 20 per cent, while well over a majority see tax mainly as a matter of the law.
While the framing of these questions may not be ideal, the results suggest that if advocates want to appeal to basic notions of fairness in addressing tax matters, they will have an uphill battle in many countries.
Tax incentives
A related and equally surprising result is that respondents on average believe that local companies and multinational companies currently pay enough tax, while in at least a few countries, average earners are seen not to pay enough.
The results are again quite varied by country, but consider the following: the countries where respondents believe multinationals are not paying enough tax are all more developed (Australia, Canada, Japan, the United Kingdom and the United States).
Russians also share this view, but they don’t believe any group is paying enough tax. On the other hand, respondents in China, South Korea, Mexico and Turkey all believe (50 per cent or more net) that multinationals do pay enough.
Another interesting finding pertains to tax incentives. Many analysts and campaigners believe tax incentives are poorly targeted, wasteful, and lead to a race to the bottom in revenue collection. But the public does not share this view.
People are generally supportive of incentives for infrastructure projects, retirement, green investments, and, to a somewhat lesser degree, investments by multinationals.
Opposition to incentives for multinationals seems not to rise above about a third in any of the 20 countries surveyed.
These results should be taken with a grain of salt, for the reasons I mentioned above. But they do suggest, at a minimum, that baseline support for progressive tax reforms, framed as progressives like to frame these reforms, is tepid.
We need to find out more about how people really do think about tax around the world and to tailor messages and framing accordingly.
Jason Lakin is head of research for the International Budget Partnership. E-mail: [email protected]