CRA: Some Sympathy for Tax Avoiders :CRA SOTW
The recent tax tale - 16 Sept 2008 “Canadians now Feel some Tax Evasion is Justifiable”
http://groups.google.com/group/ott.general/browse_thread/thread/a5a44e2da25869fc/0d61d5d6d042fbc5?lnk=st&q=#0d61d5d6d042fbc5 illustrates why some Canucks justify Tax Evasion. This week’s Tax Tale discusses how the CRA wants to deter tax avoiders.
Appeal to potential tax evaders' social conscience, revenue agency told
Make it clear taxes pay for health care, education, social services, report says
Eric Beauchesne , Canwest News Service
Published: Friday, September 19, 2008
OTTAWA - Those most likely to cheat on their taxes have sympathy for ordinary people who do it.
That's one of the findings of the Canada Revenue Agency when it peeked into the thinking of those it felt were potential tax cheats to find the best way to deter them.
It's a mindset that it feels it needs to change.
Tax avoidance was generally seen as 'wrong' or 'illegal,' and yet there was a considerable degree of sympathy for ordinary people who avoid paying their taxes," said a report on the findings of research this year aimed at helping the federal tax department prepare a tax compliance advertising campaign.
"Indeed, there seemed to emerge a double standard, whereby wealthy and powerful tax avoiders are seen as using their position to navigate and even to manipulate the system, while lower-income workers who conceal some of their earnings are seen to be doing what they need 'to get by'," it said.
"Participants were well aware of methods of avoiding taxes and most felt that the practice of avoiding taxes is very widespread," noted the report, which based on findings from 16 focus groups conducted nationwide by pollster Ipsos-Reid with Canadians who had been "screened to exhibit attitudes of being less likely than the average to fully comply with tax laws."
Tax avoidance was also seen as reasonably safe because most believed that people "generally get away with it," it said. "Severe penalties for avoiding taxes were seen as exceptional, and therefore the consequences of being caught were considered to be a mere annoyance rather than an effective deterrent."
In justifying tax evasion, most argued that the government wastes taxpayers' money, and that ordinary individuals do not get enough for what they are expected to pay in taxes, it said. Adding to that view was a perceived weaknesses in the health-care system and in government assistance for those who need it.
Also, that the government runs annual surpluses was perceived as evidence that Canadians are overtaxed.
"Nevertheless, many participants recognized these arguments as rationalizations for avoiding taxes and admitted that financial need or simple greed were the bottom-line reasons why people avoid paying their taxes," it also noted.
Two key conclusions from the research were that "messages about what taxes pay for are appealing, but guilt is not seen as an effective motivator" and that "messages about the consequences of avoiding taxes are seen as distasteful, but compelling."
As a result, the report recommends that a hybrid approach that includes both messages.
"It is also important to dispel the notion that tax avoidance is something that only wealthy people get caught for and underline the fact that 'ordinary' people are also caught," it said. "The fine line in this messaging is to avoid raising the reaction that 'ordinary' tax cheats are sympathetic figures unjustly persecuted by the government."
In terms of what governments spend the money on, the report noted that participants were split about whether the campaign should be positive and appeal to a sense of social responsibility or whether it should emphasize the negative consequences, such as the impact of a lack of funds on the health care system.
Presented with five messages, and asked to rank them in terms of their potential effectiveness, the top was that "It is wrong to avoid or underpay taxes since taxes pay for key government services such as health care, education and social services."
That was followed in order by:
- Evading or underpaying taxes is extremely risky and puts those who do it at risk of heavy fines and possibly even time in jail.
- People who pay for services 'under-the-table' run huge risks that range from damage to their home and property to liability for injuries to those performing the work.
- Avoiding or underpaying taxes is unfair because it means that those who pay all their taxes are paying more than those who don't.
- Businesses that avoid or underpay taxes not only cheat the public, they also have an unfair competitive advantage over businesses that don't cheat.
"Participants liked the idea of advertising that makes a case for why taxes should be paid by explaining how tax dollars are spent," it said.
"While many participants did say that tax avoiders could be shamed into paying all that they owe if they knew that taxes were essential to paying for public services, others convincingly questioned whether those who avoid taxes for personal gain could be moved by an appeal to altruism or whether they would believe or agree with the message that taxes pay for important services in view of the fact that so many see government as wasteful."
© Canwest News Service 2008
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Miss a Tax Tale Miss a lot!
Pop the link below into your browser to view the entire CRA SOTW Library!
http://canada.revenue.agency.angelfire.com
-------------------------------------------------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible
The recent tax tale - 16 Sept 2008 “Canadians now Feel some Tax Evasion is Justifiable”
http://groups.google.com/group/ott.general/browse_thread/thread/a5a44e2da25869fc/0d61d5d6d042fbc5?lnk=st&q=#0d61d5d6d042fbc5 illustrates why some Canucks justify Tax Evasion. This week’s Tax Tale discusses how the CRA wants to deter tax avoiders.
Appeal to potential tax evaders' social conscience, revenue agency told
Make it clear taxes pay for health care, education, social services, report says
Eric Beauchesne , Canwest News Service
Published: Friday, September 19, 2008
OTTAWA - Those most likely to cheat on their taxes have sympathy for ordinary people who do it.
That's one of the findings of the Canada Revenue Agency when it peeked into the thinking of those it felt were potential tax cheats to find the best way to deter them.
It's a mindset that it feels it needs to change.
Tax avoidance was generally seen as 'wrong' or 'illegal,' and yet there was a considerable degree of sympathy for ordinary people who avoid paying their taxes," said a report on the findings of research this year aimed at helping the federal tax department prepare a tax compliance advertising campaign.
"Indeed, there seemed to emerge a double standard, whereby wealthy and powerful tax avoiders are seen as using their position to navigate and even to manipulate the system, while lower-income workers who conceal some of their earnings are seen to be doing what they need 'to get by'," it said.
"Participants were well aware of methods of avoiding taxes and most felt that the practice of avoiding taxes is very widespread," noted the report, which based on findings from 16 focus groups conducted nationwide by pollster Ipsos-Reid with Canadians who had been "screened to exhibit attitudes of being less likely than the average to fully comply with tax laws."
Tax avoidance was also seen as reasonably safe because most believed that people "generally get away with it," it said. "Severe penalties for avoiding taxes were seen as exceptional, and therefore the consequences of being caught were considered to be a mere annoyance rather than an effective deterrent."
In justifying tax evasion, most argued that the government wastes taxpayers' money, and that ordinary individuals do not get enough for what they are expected to pay in taxes, it said. Adding to that view was a perceived weaknesses in the health-care system and in government assistance for those who need it.
Also, that the government runs annual surpluses was perceived as evidence that Canadians are overtaxed.
"Nevertheless, many participants recognized these arguments as rationalizations for avoiding taxes and admitted that financial need or simple greed were the bottom-line reasons why people avoid paying their taxes," it also noted.
Two key conclusions from the research were that "messages about what taxes pay for are appealing, but guilt is not seen as an effective motivator" and that "messages about the consequences of avoiding taxes are seen as distasteful, but compelling."
As a result, the report recommends that a hybrid approach that includes both messages.
"It is also important to dispel the notion that tax avoidance is something that only wealthy people get caught for and underline the fact that 'ordinary' people are also caught," it said. "The fine line in this messaging is to avoid raising the reaction that 'ordinary' tax cheats are sympathetic figures unjustly persecuted by the government."
In terms of what governments spend the money on, the report noted that participants were split about whether the campaign should be positive and appeal to a sense of social responsibility or whether it should emphasize the negative consequences, such as the impact of a lack of funds on the health care system.
Presented with five messages, and asked to rank them in terms of their potential effectiveness, the top was that "It is wrong to avoid or underpay taxes since taxes pay for key government services such as health care, education and social services."
That was followed in order by:
- Evading or underpaying taxes is extremely risky and puts those who do it at risk of heavy fines and possibly even time in jail.
- People who pay for services 'under-the-table' run huge risks that range from damage to their home and property to liability for injuries to those performing the work.
- Avoiding or underpaying taxes is unfair because it means that those who pay all their taxes are paying more than those who don't.
- Businesses that avoid or underpay taxes not only cheat the public, they also have an unfair competitive advantage over businesses that don't cheat.
"Participants liked the idea of advertising that makes a case for why taxes should be paid by explaining how tax dollars are spent," it said.
"While many participants did say that tax avoiders could be shamed into paying all that they owe if they knew that taxes were essential to paying for public services, others convincingly questioned whether those who avoid taxes for personal gain could be moved by an appeal to altruism or whether they would believe or agree with the message that taxes pay for important services in view of the fact that so many see government as wasteful."
© Canwest News Service 2008
-----------------------------------------------------------------------------------------------------
Miss a Tax Tale Miss a lot!
Pop the link below into your browser to view the entire CRA SOTW Library!
http://canada.revenue.agency.angelfire.com
-------------------------------------------------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible