When it comes to tax, who do you trust? This is the question that was put to more than 8,400 people spread among the G20 countries. Their answers are very illuminating and will help guide tax thinking and policy into the future.
G20 Public Trust in Tax: Surveying public trust in G20 tax systems, January 2019, by ACCA, CA ANZ and the International Federation of Accountants (IFAC), found that people trust tax professionals, but are divided on their attitudes towards tax authorities and remain sceptical about politicians and the media. These same people are concerned about transparency, complexity and inequality in tax systems around the world, but they also understand that tax is an international issue that requires policy trade-offs.
In all, the survey, a follow-up to one conducted in 2017, reveals a sophisticated understanding among taxpayers about the tax system – people recognise the system’s uncertainty and opacity – and the perception that high income earners and multinational companies are better off in tax terms than average or low income earners. But the survey also reveals that people are split on how tax competition can affect multinationals and national tax revenue.
‘Citizens across G20 countries are concerned about transparency, complexity and inequity in tax systems,’ says Helen Brand, ACCA’s chief executive. ‘However, they are also aware of the international tax landscape and understand the need for trade-offs in tax policy. In tackling these issues, people say they trust and want to hear more from experts and professionals, but have grown sceptical of politicians and the media.’
Transparency top concern
Transparency is the top area of concern. Across the G20, respondents desired more clarity on how and from whom their governments collect taxes, and how their tax money is spent. Corruption in the tax system is a top concern in many countries.
The survey found that people want more clarity on the relative contributions made by different classes of taxpayer to their national coffers. They were particularly concerned about multinational companies (MNCs) – overall, a small majority believed that MNCs were paying enough tax, but in a number of countries, including the US, UK, Australia and New Zealand, a clear majority didn’t think so.
These particular findings should be set against the background of increased scrutiny of MNC tax arrangements. The Organisation for Economic Co-operation and Development’s base erosion and profit shifting (BEPS) project is aiming to provide global coordination of tax policies so that companies are seen to be paying their ‘fair share’ of taxes in all countries where they do business.
However, a number of individual jurisdictions have been putting in place their own tax measures, such as the UK’s diverted profits tax, to combat what they see as abusive tax planning on the part of these companies. Such moves often come in response to local political lobbying, so it is perhaps not surprising that respondents in countries such as Australia, New Zealand and the UK are the least supportive of the notion that MNCs are paying enough tax.
The accountancy profession should not rest on its laurels – 55% say they trust tax advisers, but this is down from 2017
It is a similar pattern for high income individuals. While the overall picture suggests that the majority of respondents believe such individuals pay enough tax, there are a small but significant number of jurisdictions where it is believed they do not pay enough – Canada is the standout country in this respect, but also Italy, Japan, New Zealand and to a lesser extent the US. Interestingly, the taxation of high income individuals creeps into positive territory in the UK despite high profile campaigns calling for greater scrutiny and action.
Perhaps unsurprisingly, average or low income individuals are seen to be paying enough tax across the board, apart from in France, where a tiny percentage of those surveyed do not share this view. It is the same for local businesses, with again only one country, in this case Japan, expressing negative sentiment. The outlier in all of this is Russia, where there is a clear majority that believe no one (high/low income earner, local or multinational businesses) is paying enough tax.
The good news for the global accountancy profession is that, on the whole, tax professionals – those that help advise individuals and companies over their tax affairs – are considered to be more trustworthy than the tax authorities, politicians and the media.
However, even here there is a wide spread of opinion; while an overwhelming majority trust tax professionals in Indonesia, China and India, there is a much more even split between trust and distrust of these professionals in the UK, France and Germany. Germany was the only country where distrust outweighed trust in the public’s mind.
But the accountancy profession should not rest on its laurels – although 55% say they trust tax advisers, this is down two percentage points on the same survey that was carried out in 2017. Clearly, public trust is not to be taken for granted – the profession needs to continually strive to earn public trust.
Non-government agencies came second in the trust league table. However, people were divided on their trust in government tax authorities, with 37% saying they trust or highly trust the tax authorities (making them the third most trusted group) while 34% said they distrust or highly distrust them (third most distrusted group).
It probably comes as no surprise that the least trusted group in the survey are politicians, though it might be surprising to learn that the trust profile has improved between this survey and the previous 2017 poll.
The jury is out on the tax authorities themselves, with people showing an even split between trust and distrust. However, more people report a positive than negative experience in their dealings with the tax authorities when they are managing their tax filings, payments and general tax affairs, although there is variability across jurisdictions.
People are less positive in their perceptions of the overall fairness of the process of interacting with the tax authorities, and the reasonableness of how payment demands are dealt with. This is an area where tax authorities will need to improve if they are to improve their trust ratings. As one respondent in Australia says: ‘Countries need to make taxes a more simple process; people don’t want to feel like every time they talk to the tax office that they’re going to get audited.’
One final point raised by the survey, which bodes well for the future of the OECD’s BEPS project, is that most respondents are supportive of cooperation on international tax policy with the aim of creating a more coherent international tax system, though there is an acceptance that tax can be used to attract inward investment.
As Rick Ellis, chief executive of CA ANZ, says: ‘People have an expectation that governments will work together for greater international coherence in tax systems, but are also wise to the reality of national priorities such as attracting multinational business and tax policy as a national economic lever.’
Read the full report G20 public trust in tax: Surveying public trust in G20 tax systems, January 2019.