On March 26, ISET hosted Dr. Lotta Björklund Larsen of Stockholm University, Sweden, who presented a paper entitled ‘Tax Compliance. A Review of Recent Studies’.
“How are people made to pay tax, at the right time and the right amount?” Dr. Björklund Larsen began. “How are they made to comply? This is an eternal research question for tax collectors, law and policy makers, politicians, as well tax scholars. It is also a question that cannot be answered from the perspective of one scientific angle. In this presentation I reviewed research about tax compliance drawing on recent studies from economics, political science and anthropology. I argued that in order to understand why we pay tax—that is, why we comply with taxes and taxation—as well as why we avoid doing so, we have to look beyond legal changes, psychological experiments, economic results, the organization of revenue collection and all actors’ practices in society’s tax arena and study the type of relations, and expectations, that taxpaying is seen to create in society.
“Think about it. Why do you pay tax? There is usually a combination of answers. It could be that you expect to get something for your money which brings us to the concept of reciprocity. I see that the state spends money in a wise way which makes me feel that my tax money comes to good use. Reciprocity also means that we expect other taxpayers to pay their fair share of tax; that we all contribute to the state. Reciprocity is thus a relation with governmental institutions but is also a relation to all other citizens who ought to pay tax.
“Understanding tax compliance also means that we can cast the gaze on how governmental bureaucracies are perceived; if they are seen to do their job effectively and fairly in a transparent way trust is increased and we are more inclined to pay. But they also have the possibility to enforce collection; either by threat of fines if you avoid paying your due tax or simplify your taxpayments to the extent that you cannot err.
“As economist James Alm proposes: we have to look at the “full house” of strategies to measure, explain, and control the “full house” of behaviors and motivations that makes taxpayers comply.”
ISET would like to thank Dr. Björklund Larsen for taking the time to visit the institute and talk about such an interesting and relevant topic.
