I always notice that people get angry about what they think the government is doing, especially when they refer to themselves as taxpayers. You know “As a taxpayer, I … ”
What is interesting about this is the end of the sentence is never really about taxes. It is sort of a frame they use to express their right to have an opinion or they deserved to be heard.
We have a strong civic commitment to taxpaying. If you ask people whether it’s their civic duty to pay their fair share, 95 percent will agree with that statement. And that carries over into tax compliance.
The government often describes compliance as having to do with our tax morale, that is to say, our sense that this is our shared responsibility and we all have to chip in.
Well, I think it’s a very human feeling to want to feel that you contribute, right? There are all kinds of studies showing that as people get older, one of the things that keep them healthy is the belief that they are still contributing.
One thing that I think people can feel about their taxes is that, “Here is the evidence of me doing my part.” Now, I might not be happy about where the money is going. Or, I might be very unhappy and this is the most common thing for people to be unhappy about with taxes, is the idea that other people aren’t chipping in.
So, “I’m the one doing my part but other people aren’t doing their part?” But, nonetheless, that feeling of, you know, “I’m an adult. I’m a contributing person. I do my bit. I’m an upstanding citizen”, that’s something that really appeals to people.
Another is the misperceptions people have about who pays what and how much. Particularly, people misperceive both what the poor and the rich pay in taxes. Many say that the poor “pay no taxes”.
One thing that misguides us about how much people pay in taxes is the details of the taxpaying process. Now, the income tax is very salient. It’s at the front of almost everyone’s mind even when it’s not a particularly expensive tax to them, personally because it’s a hassle. Every year you have to think about it; people are probably thinking about it right now. And even if at the end of the day the cost is small, it’s the hassle that is high. People tend to get a little confused. And they confuse hassle with cost.
The income tax is, of course, a progressive tax that falls more heavily on wealthy people than poorer people. Sometimes they focus so completely on income tax that they fail to think about other kinds of taxes, which fall quite heavily on lower-income people.
When people forgot the taxes that they paid, it tends to be the ones that are easy to pay. For example, high income people tend to forget about the sales tax because they don’t have to do any work to pay it, right?
They go to the store; take it out; don’t really think about it. And they certainly don’t add up the total over the year. But for lower-income people, the sales tax is a real expense. They are very aware of the cost they are paying when it’s 3 percent, 4 percent at the grocery store, because they watch every penny in their budget.
What I think is that, because people focus on the income tax which hit the rich more than the poor and because they tend to forget about the taxes that are easier to pay but are actually very expensive for lower-income people. Overall they underestimate taxes paid by low income people. And many people underestimate that.
Generally I think the most important thing is to recognise that people see taxpaying as evidence that they are contributing people.
Therefore it is very hard for people to connect their values with policy, even though taxpayers say the tax money are wasteful, “the money didn’t go where it was supposed to” when, on the other hand, the politicians say “it’s going to where it’s supposed to go”. And then these things in the middle that have people of mixed views including those who think ‘Yeah, we should definitely be paying for that,’ makes you unusual as a taxpayer. But that’s fine.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the New Sarawak Tribune.
