1. Eliza Ahmed Centre for Tax System Integrity Australian National University When tax offices become collection agencies: At what cost?

2. Do tax authorities leave themselves at risk of tax evasion when they become collection agencies for controversial government policies?

3. 1.When tax collectors become collectors for child support and student loans: Jeopardizing or protecting the revenue base? (Ahmed & V. Braithwaite) 2.Tax evasion among graduates repaying student loans: Balancing the books, sending a political message, or flouting the system? (V. Braithwaite & Ahmed) 3.Can justice and shame deter an escalation in tax evasion? (Ahmed & V. Braithwaite)

4. What does past research tell us?  Financial self-interest (Allingham & Sandmo, 1972; Freiberg, 1990)  Deterrence (Grasmick & Bursik, 1990; Lewis, 1982)  Moral obligation (Grasmick & Bursik, 1990; McGraw & Scholz, 1991; Schwartz & Orleans, 1967)

5.  Shame management (Ahmed, Harris, Braithwaite, & Braithwaite, 2001)  Fairness (Kinsey & Grasmick, 1993; Scholz & Lubell, 1998)  Reactance (Kirchler, 1999) What does past research tell us? (cont’d)

6.  Trust (Scholz & Lubell, 1998; Tyler, 1997, 2001)  Trust norms (V. Braithwaite, 1998) What does past research tell us? (cont’d)

7. STUDY 1 Research questions 1.Are taxpayers making additional payments through the tax system less compliant? 2.To what extent does belief in trust norms act as a social constraint, and prevent tax evasion?

8.  Community Hopes, Fears and Actions Survey (Braithwaite, 2000)  7754 randomly sampled Australian citizens were mailed out the survey questionnaires  2040 respondents returned their completed questionnaires METHOD

9. Dependent variable: Tax evasion  Under-reporting income  Engaging in the cash economy  Exaggerating deductions MEASURES

10. Independent variables  Additional payments  Deterrence  Shame management - shame acknowledgment - shame displacement - shame avoidance  Trust norms

11. RESULTS

12. Table 1. Correlation coefficients between tax evasion and other variables ☺☺☺ p <.001 ☺☺ p <.01 -.19☺☺☺ Trust norms.13☺☺☺Shame avoidance.12☺☺☺Shame displacement -.19☺☺☺Shame acknowledgment -.16☺☺☺Deterrence enforcement.13☺☺☺ Additional payments Correlation coefficientsVariables

13. Table 2. Standardized beta coefficients from regression analysis predicting tax evasion ☺☺☺ p <.001 ☺☺ p <.01 ☺ p <.05 Variables Model 1 Model 2 Model 3 Additional payments.08☺☺.07☺ Deterrence enforcement (DE)--.10☺☺☺-.09☺☺ Shame acknowledgment (SA)--.08☺☺-.09☺☺ Shame displacement-.10☺☺☺.09☺☺ Shame avoidance-.06☺ Trust norms (TN)--.15☺☺☺ Additional payments * DE- --.02 Additional payments * SA- -.03 Additional payments * TN- --.14☺☺☺ Adj R square.06.12.14

14. Figure 1. The role of trust norms in moderating the relationship between making additional payments and tax evasion ___ Additional payments ----- No payments

15. When policy changes, citizens may protest, but the relationship between citizens and the tax office acts as a protector, ensuring that non- compliance does not spin out of control. Summary from Study 1

16. STUDY 2

17. Figure 1. A conceptual model of justice, shame and tax evasion Societal injustice Should I break the law? Additional payments Poor shame management Tax non-compliance Personal injustice

18. STUDY 2 Research aims 1.To explore the extent to which additional payments, perceptions of justice, and shame management play important roles in predicting tax non-compliance 2.To evaluate the theoretical relationships among all variables sketched in Figure 1

19. METHOD  Graduates’ Hopes, Visions and Actions Survey (Ahmed, 2000)  1500 stratified sampled Australian graduates were mailed out the survey questionnaires  447 respondents returned their completed questionnaires

20. Tax non-compliance variables  Dissociation (desire to game play or disengage)  Tax evasion (behaviors of not lodging, under- declaring income, or over-claiming deductions) MEASURES

21. Independent variables  Additional payments  Perceived injustice - societal (unfair social policy) - personal (unfair exchange)  Shame management - shame acknowledgment - shame displacement - shame avoidance

22. RESULTS

23. Table 3. Results from the logistic regression analysis in predicting tax evasion ☺☺☺ p <.001 ☺☺ p <.01 ☺ p <.05 PredictorsModel 1 Model 2 Model 3 Additional payments.72☺☺.79☺☺.85☺☺ Societal injustice -.17.16 Personal injustice -.45☺☺.39☺ Dissociation - -.62☺☺☺ Nagelkerke R 2.05.08.12 Chi-square 12.4620.15☺ 32.38☺☺☺

24. Figure 2. Results of a path analysis showing the relationships among all variables considered in Study 2.17.15.19.10 -.25 -.10.28.13 -.12 Shame avoidance Tax evasion Shame acknowledgment Shame displacement Personal injustice Societal injustice Dissociation.12

25. Table 4. The overall fit indices for the model derived from the path analysis

26. “... The one thing that I did find annoying was paying HECS for one or two units where the tutors were hopeless and basically didn’t teach us much at all. I realize it is more the responsibility of the universities to ensure that their tutors are competent, but it is in cases like these that people resent having to pay HECS, ie. when they didn’t learn anything new!”

27. “The government should realize that investing in tertiary education is investing in the country’s future. By raising fees, introducing up-front fees,..., they are encouraging people not to study and not to help educate the country. Education should be free, after all people in the army get paid to be educated!”

28. “I think that HECS should only be repaid if the education received has been of value in gaining employment”

29. Where to from here? “Responsive regulation is distinguished (from other strategies...) both in what triggers a regulatory response and what the regulatory response will be.... Government should be attuned to the differing motivations of regulated actors. Efficacious regulation should speak to the diverse objectives of regulated firms, industry associations, and individuals within them” (Ayres & J. Braithwaite, 1992)