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Understanding Taxpayer Behaviour – New Opportunities for Tax Administration

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  • Keith Walsh

    (Office of the Revenue Commissioners, Dublin)

Abstract

There is a growing literature on the contribution of behavioural economics to the design and improvement of tax policy. A less well-developed area is the potential for behavioural research to contribute to better tax administration. Better understanding of the motives of taxpayers and their attitudes and behaviour towards taxation can improve both voluntary compliance and the efficiency of the tax administration. The literature suggests tax compliance is determined by five broad factors: deterrence; norms (both personal and social); fairness and trust (in the tax administration); complexity of the tax system; and the role of government and the broader economic environment. Research in Ireland suggests that deterrence, the more traditional tool of tax administrations, is important but not sufficient to explain the level of tax compliance in society. Other factors are shown to be important, particularly the influence of personal norms and the level of trust in the tax administration. Perceptions of the prevailing social norms are also important determinants of compliance but appear to exert less influence on taxpayers than personal norms. The experiences of tax administrations in using behavioural research to influence taxpayers are examined and work in this area in Ireland is outlined.

Suggested Citation

  • Keith Walsh, 2012. "Understanding Taxpayer Behaviour – New Opportunities for Tax Administration," The Economic and Social Review, Economic and Social Studies, vol. 43(3), pages 451-475.
  • Handle: RePEc:eso:journl:v:43:y:2012:i:3:p:451-475
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    File URL: http://www.esr.ie/vol43_3/06%20ESRI%2043-3%20Walsh%20(PP).pdf
    File Function: First version,2012
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    Cited by:

    1. Yi-Chung Hsu & Chien-Chiang Lee, 2016. "Factors Affecting Tax Evasion: Do Interest Rate And Regional Effects Matter?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-23, September.

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