Framing of information on the use of public finances, regulatory fit of recipients and tax compliance

Abstract

Information campaigns to increase tax compliance could be framed in different ways. They can either highlight the potential gains when tax compliance is high, or the potential losses when compliance is low. According to regulatory focus theory, such framing should be most effective when it is congruent with the promotion or prevention focus of its recipients. Two studies confirmed the hypothesized interaction effects between recipients' regulatory focus and framing of information campaigns, with tax compliance being highest under conditions of regulatory fit. To address taxpayers effectively, information campaigns by tax authorities should consider the positive and negative framing of information, and the moderating effect of recipients' regulatory focus. KeywordsRegulatory focus; Regulatory fit; Goal-framing; Tax compliance Tax payments represent a social dilemma with colliding individual and collective interests. The financial basis for effective political and economic activities of the government is solid as long as the state succeeds in motivating citizens to cooperate rather than to defect. If a majority of citizens engages in tax avoidance and evasion, provision of public goods and services is at risk (e.g., van Lange, Liebrand, Messick, & Wilke, 1992). Despite temptations to cheat, people in many countries keep up relatively high tax morale and seem to accept their duty to pay taxes (Braithwaite, 2003;James & Alley, 2002;. Nevertheless, "taxes" have a negative connotation, are associated with an expensive and inefficient management style of politicians and often linked not only to the loss of money but also -especially in the case of self-employment -to restrictions of personal freedom in deciding how to spend and invest one's "own" money (Kirchler, 1998). Information campaigns on taxes and spending policy of the government as well as the provision of public goods can improve both citizens' understanding and acceptance of taxes and their compliance. Tax compliance is likely to increase if the tax system is perceived as being transparent, fair, and trustworthy, and when tax knowledge increases (e.g., . This article examines the differential effectiveness of information campaigns. It is assumed Promoting tax compliance by information campaignsNeoclassical economics postulates that taxpayers consider audit probability and fines in case of tax evasion and comply with the law only if audits are likely and fines are high (Allingham & Sandmo, 1972). The effect of audits and fines has, however, often been disputed (e.g., Andreoni, Erard, & Feinstein, 1998) and without doubt there are other than purely rational-economic variables determining tax behaviour. Moreover, under some circumstances, audits and fines may have the opposite effects than expected (e.g., Eichenberger & Frey, 2002;. If the deterring effect of audits and fines is low, strategies which aim to promote tax compliance should be applied (Pommerehne & WeckHannemann, 1992). Cooperation with tax authorities could be promoted by various media. I...

Regulatory focus in economic contexts

“…Designing a context that leads to non-fit would lead to reduced engagement and, most probably, undesired results. An illustrative example comes from Holler, Hölzl, Kirchler, Leder, and Mannetti (2008). The researchers found that compliance to pay taxes decreased considerably under conditions of non-fit.…”

Peranan Etika, Pemeriksaan, Dan Denda Pajak Untuk Meningkatkan Kepatuhan Wajib Pajak Orang Pribadi

“…Pembayaran pajak merupakan sebuah dilema sosial karena sering terjadi pertentangan antara kepentingan invidual dan kepentingan kolektif (Holler et al 2008). Dukungan keuangan dari pajak untuk aktivitas-aktivitas ekonomis dan politis pemerintah akan dapat efektif jika negara mampu memotivasi warga negaranya untuk menaati ketentuan-ketentuan perpajakan.…”

“…Menurut teori tersebut, pembayar pajak hanya akan taat tehadap aturan pajak jika terdapat kemungkinan besar mereka akan diperiksa dan jika denda pajaknya tinggi (Allingham dan Sandmo 1972). Namun, kebijakan pemeriksaan dan denda pajak terkadang mempunyai efek yang kontradiktif dengan yang diharapkan (Holler et al 2008). Selain itu, kemungkinan terdapat variabel-variabel selain variabel ekonomis-rasional (seperti ancaman pemeriksaan dan denda) seperti etika, tingkat kepercayaan terhadap sistem hukum dan perpajakan, dan religiusitas yang mempengaruhi perilaku pajak (Holler et al 2008).…”

Are Taxes Beautiful? A Survey Experiment on Information, Tax Choice and Perceived Adequacy of the Tax Burden

“…According to several recent studies, providing information about government spending may increase the public acceptability of the taxes (Kallbekken and Aasen, 2010, Beuermann and Santarius, 2006, Klok et al, 2006). Moreover, informing the taxpayers about the (social) bene…ts of tax payments can stimulate taxpayers'cooperative attitude towards the state and can signi…cantly reduce tax evasion (Holler et al, 2008).…”