Perceptions of who's not paying their fair share

Introduction Tax authorities are brokers for social order and harmony in democracies. They cannot determine the policies that are supposed to deliver these goals, nor the rules by which individuals are expected to contribute to the government coffers. But they carry responsibility for making it all happen--collecting taxes and providing government with revenue. As such, their integrity is pivotal to smooth democratic functioning. Integrity for a tax authority involves having purposeful and sound goals, appropriate and ethical procedures for pursuing such goals, and processes allowing reflection and evolution of their operation in response to the democratic will (Braithwaite 2003a). This paper is a contribution to the process of reflection on how the tax system is working for its citizens. Its purpose is to investigate the extent to which the Australian community believes that their tax authority is pursuing one of its goals, collecting revenue, in a sound and purposeful way. Three questions are addressed: (a) Are different social groups in our society paying their fair share of tax? (b) What are the experiences and aspirations lying behind public perceptions that some groups do not pay their fair share? and (c) Do perceptions of fairness shape the direction in which Australians want to see tax reform progress? A fair share: objective reality or subjective evaluation? The emphasis in this paper is on "what the people think"--do Australians believe that different groups are paying their fair share of tax? This does not imply that the people are always right, nor that they base their judgments on correct information, nor that they are immune from propaganda or prejudice. It does assume, however, that people's perceptions matter, and that when such perceptions are strongly held and enduring, principles of good governance demand responsiveness from relevant authorities. Responsiveness, however, is best offered when complaints of unfairness are understood. Analyses of survey responses presented in this paper illustrate some of the community's underlying fears of and hopes for the tax system as well as their wish list for tax reform. Whether or not wealthy and privileged groups in society pay their fair share of tax has been a contentious issue for some time. Enquiries into the tax system have noted public concern that those with resources are able to take advantage of tax avoidance schemes and dramatically reduce their taxable income in ways outside the reach of most Australians, including wage and salary earners whose income places them in the top marginal tax bracket (Fraser, Boucher, Freeland, Gregory & McClelland 1999; Hobson 2002; Murphy 2003; Murphy & Byng 2002; Rawlings 2003; Senate Economics References Committee 2001; Women's Electoral Lobby 1999). At the same time, the media has exposed instances of the highly favourable taxation arrangements of the privileged, some of which are legal as in the case of Queensland judges who enjoy especially advantageous superannuation conditions vis-a-vis taxation (Sydney Morning Herald 6 February 2003), while others are illegal as in the case of New South Wales barristers who failed to pay tax for years on end (Sydney Morning Herald 26 February 2001). While schemes for tax avoidance and evasion have become commonplace in Australia's financial landscape, less is known of how Australians are dealing with these developments. Do they believe, for instance, that those belonging to the top echelons of Australian society are shirking their taxpaying responsibilities, and it so, do they see it as cause for concern? And, if it is of concern, what do they believe should be done? This paper addresses these questions through a quantitative analysis of responses to the Community Hopes, Fears and Actions Survey (Braithwaite 2001), a nation-wide survey of Australians' views of their tax system and its administration. Theoretical underpinnings Sociologists and psychologists have long maintained that people act in ways that are consistent with their perceptions, beliefs and feelings about the world around them (Allport 1961; Thomas & Znaniecki 1918), and that their interpretations of what is happening are as important to understand as the so-called objective events of the day. …