At intervals tax systems must be taken to the polity for discussion in

At intervals tax systems must be taken to the polity

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elites who appreciate the finer details of tax law and tax administration. At intervals, tax systems must be taken to the polity for discussion in accordance with the best practices of democratic deliberation. At the coalface, however, issues of shared understanding about the purposes of the tax system are not at the forefront of anyone’s thinking; the issue at stake is compliance – will she or will she not, is she or is she not complying with the law? From the perspective of the regulator or tax officer in Figure 13.1, a direct request for an action to be undertaken must be made to the regulatee or the
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276 Taxing Democracy Shared understanding of taxation in the democracy Tax office culture Taxpayer culture Request received as intended Request acted on as intended yes on track compliance failure yes no yes on track no compliance failure Compliance requested Compliance visible no yes bonus on track system failure compliance/ system failure bonus compliance system failure compliance/ system failure no blackhole with hope blackhole without hope blackhole with hope blackhole without hope Figure 13.1 Possible outcomes when tax office capacities are matched with taxpayer capacities taxpayer. Reasons for the non-occurrence of the request might be that the regulator did not make it clear what action was required (the request was too vague or complex) or the request did not reach the target (e.g., a letter was sent to the wrong address, or was not sent at all). The regulator, having made the request, then has an interest in knowing if the regulatee has complied. The required response, therefore, may be one that is visible to the regulator (the regulator can confirm that the correct amount of tax has been paid or that a return has been lodged) or not visible (the regulator cannot routinely check on whether action has been taken, as in declaring cash income). From the perspective of the regulatee or the taxpayer, the compliance question can be subdivided into two components: (a) receiving the request and processing it cognitively as the regulator expects, and (b) acting upon the request in the way the regulator expects. Failure to receive the request as intended might occur if the taxpayer has inadvertently misinterpreted the request (e.g., misunderstanding the difference between franked and unfranked dividends), or if the regulatee gives the request meaning that undermines the intent of the regulator (e.g., playing for the grey in tax law). Similarly, a failure to act upon the request, as when a tax return is filled out incorrectly, may be due to misunderstanding or carelessness, or it may be a case of just ‘saying no’.
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Tax System Integrity and Compliance 277 As we focus on each of the 16 cells in Figure 13.1, the many faces of compliance from an administrative perspective become apparent. If we look for the cells in which compliance is ‘on track’ or ‘achieved’, we find only four of the 16 possible outcomes meeting the criteria of success. The majority of the possible outcomes deviate from the classic case of compliance.
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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