CIAT General Assembly Quito, April 2011 Tax morale – Norwegian strategies

Norway – an extensive and hilly country – half beyond the Arctic Circle

Beautiful Norway – west side

Beautiful Norway – North side

The Capital: Oslo – urban and close to nature

The Kingdom of Norway – key figures Population4,888,000 (July 1, 2010) GDP annual growth-1.4% (2009) GDP per capitaThird in the world Inflation2.1% (August August 2010) Unemployment3.3% (2010’s second quarter) Public budget surplus14.3 % of GDP (2009) Life expectancy83 years old (women), 79 years old (men)

Norway’s Tax Administration – Key figures : Number of employees:2011 Budget: 6 400NOK 4.4 billion (USD 0.75 billion) Number of offices:Number of taxpayers: 259, of which 146 are small- sized Individuals: 4,300,000 Self-employed: 300,000 Bodies Corporate: 228,000

The Norwegian tax system Taxes administered by the Norwegian Tax Administration Personal income tax Self-employment tax Corporate income tax Value-added tax Inheritance tax Employer’s contribution Taxes administered by other public institutions Import value-added tax (customs) Special taxes on alcohol, tobacco, cars, etc. (customs) Real estate taxes (municipal)

What is tax morale? An unrestricted willingness to comply with tax laws? Irrational rule fetishism, since we always ask ourselves whether a rule is reasonable Angel’s selflessness, loving others more than one loves oneself A not so solid social rule, but highly influenced by the social environment I do what the others do, but I think there are (many?) others who don’t pay their taxes We always look for justifications to make exceptions for ourselves Special conditions not foretold by lawmakers The others pay enough A mechanism for embarrassment More important as a penalty than as supplement for the payment of taxes

Our business philosophy Tax calculation is based on data from taxpayers and third parties Most taxpayers comply voluntarily Segmentation and selection based on risk analysis and sampling Three major taxpayer categories: 1) employees 2) self-employment and bodies corporate 3) black economy players

Production – “The green and red path” Production Assessment Control Income Information from taxpayers and third parties

The tax morale in Norway Flexible and pragmatic, because When there are no independent data with which to influence taxpayers, making exceptions for oneself is tantalizing Statistical facts are very persuasive Opportunity makes the thief But also strong, because Public spending is typically perceived as used to pay for public goods The Tax Administration brings detected and penalized non-compliant taxpayers to light Media strategy It is important not to give a too negative impression, but the message should always imply that criminals are atypical Information systems demand “voluntary” compliance We have established contacts with different groups within society: Employers,

Some mechanisms Tax Morale Tax behavior Social standards Experiences with the TA What do others do? Personal standards TA’s behavior TA’s media strategy Attitude towards the tax system Cooperation with reliable agents in the economy, schools and universities

TRANSPARENT PROVIDENT USER-FRIENDLY PUBLIC SECTOR QUALITY CULTURE EXPERTISE Strategies and values: our officers’ behavior Professional Considerate Innovative

Communication strategy Use it in active way by always being visible in the media!

Cooperation with other groups within society Why agreeing on a common strategy? Because there are common interests! Collecting taxes Fighting unfair competition Assuring good working conditions Protecting consumers against bad quality work Hence, common understanding on the fact that “the underground economy is a social problem with harmful consequences on different levels”

Forum on cooperation against the underground economy Working together to reduce the black economy

The President of the Forum is The General Tax Director, Mr. Svein R Kristensen Secretariat of the Tax Administration of Norway 8 – 10 meetings per year 16 regional forums Organization

Core activities conferences media Information activities campaigns Regional activities Information activities Operation

Conclusions It is very important not only to use one approach when trying to strengthen tax morale Learn your staff to treat the taxpayer in a civilized way Make good use of your enforcement activities through the active use of media Establish alliances with other society stakeholders with common interests

Thank you! Any questions?