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When Tax Collectors Become Collectors for Child Support and Student Loans: Jeopardizing the Revenue Base?

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  • Eliza Ahmed
  • Valerie Braithwaite

Abstract

This paper investigates the relationship between making additional payments to the state for student loan (via the Higher Education Contribution Scheme) and child support (via the Child Support Scheme) and compliance with tax law. Data are taken from the Community Hopes, Fears, and Actions Survey based on a random sample of 2040 individuals. Additional payments were found to pose a compliance problem for tax authorities. At the same time, this study demonstrated that perceived deterrence, moral obligation and possible trustworthiness play significant roles in reducing tax evasion. An important finding to emerge from this study is that tax evasion is more likely to accompany additional payments when personal income and belief in trust norms are low. The finding of greater tax evasion among economically marginalized groups has been demonstrated in other contexts, but the adverse effects of becoming irreconcilably socially marginalized from legal authority has tended to be both undervalued and under‐theorized in the taxation compliance literature. Dieser Artikel untersucht die Beziehung zwischen zusätzlichen Zahlungen an den Staat für Studiendarlehen (im Rahmen des australischen Higher Education Contribution Scheme) sowie Kinderunterstützung (im Rahmen des Child Support Scheme) und der Steuerehrlichkeit. Die Daten stammen aus dem ‘Community Hopes, Fears and Actions Survey’, der auf einer Zufallsstichprobe von 2040 Personen beruht. Es zeigt sich, dass zusätzliche Zahlungen die Steuerbehörden mit Problemen bezüglich der Steuerbereitschaft konfrontieren. Gleichzeitig ergibt diese Studie, dass die wahrgenommene Abschreckung, moralische Verpflichtung und mögliche Vertrauenswürdigkeit wichtige Rollen in der Verringerung der Steuerhinterziehung spielen. Ein wichtiges Ergebnis dieser Studie ist, dass zusätzliche Zahlungen am ehesten dann mit Steuerhinterziehung einhergehen, wenn das persönliche Einkommen und der Glaube an Normen tief sind. Dass Steuerhinterziehung in den wirtschaftlich benachteiligten Gruppen höher ist, wurde auch in anderen Zusammenhängen nachgewiesen, aber die kontraproduktiven Auswirkungen einer unwiderruflichen sozialen Ausgrenzung durch die Rechtsbehörden wurde bisher in der Steuerehrlichkeitsliteratur sowohl unterbewertet als auch zu wenig theoretisch aufgearbeitet. Cet article étudie la relation entre des payements additionnels à l'état pour financer les prêts aux étudiants (dans le cadre du Higher Education Contribution Scheme) et les contributions alimentaires pour enfants (dans le cadre du Child Support Scheme) et la complaisance fiscale. Les données sont dérivées du ‘Community Hopes, Fears, and Actions Survey’ qui est basé sur un échantillon de 2040 individus. Il est démontré que les payements additionnels posent aux autorités un problème de complaisance fiscale. En même temps, cette étude montre que le degré de dissuasion perçu, l'obligation morale et la fiabilité jouent un rôle primordial dans la réduction de l'évasion fiscale. Un résultat important de cette étude est qu'il est plus probable que les payements additionnels s'accompagnent d'évasion fiscale lorsque revenu et foi en les normes sont faibles. Le fait que l'évasion fiscale est plus importante dans des groupes économiquement défavorisés a déjàété relevé en d'autres circonstances, mais l'effet adverse d'avoir été irrémédiablement marginalisé par les autorités légales a jusqu'à présent été aussi bien sous‐évalué que trop peu analysé théoriquement.

Suggested Citation

  • Eliza Ahmed & Valerie Braithwaite, 2004. "When Tax Collectors Become Collectors for Child Support and Student Loans: Jeopardizing the Revenue Base?," Kyklos, Wiley Blackwell, vol. 57(3), pages 303-326, August.
    • Handle: RePEc:bla:kyklos:v:57:y:2004:i:3:p:303-326
    DOI: 10.1111/j.0023-5962.2004.00256.x
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    References listed on IDEAS

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    1. Bruce Chapman & Chris Ryan, 2002. "Income-Contingent Financing of Student Charges for Higher Education: Assessing the Australian Innovation," CEPR Discussion Papers 449, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    2. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar Publishing, number 1183.
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    Cited by:

    1. Lars P. Feld & Bruno S. Frey, 2007. "Tax Evasion, Tax Amnesties and the Psychological Tax Contract," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0729, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. James Alm & Matthias Kasper & Erich Kirchler, 2022. "Can ethics change? Enforcement and its effects on taxpayer compliance," Working Papers 2209, Tulane University, Department of Economics.
    3. Lars P. Feld & Bruno S. Frey, 2006. "Tax Compliance as the Result of a Psychological Tax Contract: The Role of Incentives and Responsive Regulation," CREMA Working Paper Series 2006-10, Center for Research in Economics, Management and the Arts (CREMA).
    4. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370.
    5. Enrico Nichelatti & Heikki Hiilamo, 2024. "The Effect of Citizens’ Perception of Governance on Tax Compliance: A Cross-Country Analysis Study for 32 Sub-Saharan African Countries," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(5), pages 1198-1226, October.
    6. Coricelli, Giorgio & Rusconi, Elena & Villeval, Marie Claire, 2014. "Tax evasion and emotions: An empirical test of re-integrative shaming theory," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 49-61.
    7. James Alm & Chandler McClellan, 2012. "Tax Morale and Tax Compliance from the Firm's Perspective," Kyklos, Wiley Blackwell, vol. 65(1), pages 1-17, February.
    8. Wolfram F. Richter & Berthold U. Wigger, 2012. "Besteuerung des Humanvermögens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(1-2), pages 82-102, February.
    9. Inna Cabelkova, 2021. "Sustainability of State Budgetary Expenses: Tax Compliance of Low-, Middle-, and High-Income Groups—The Evidence from the Czech Republic," Sustainability, MDPI, vol. 13(16), pages 1-16, August.
    10. Wilfried Anicet Kouamé, 2015. "Tax Morale and Trust in Public Institutions," Cahiers de recherche 15-14, Departement d'économique de l'École de gestion à l'Université de Sherbrooke, revised Oct 2017.
    11. Hofmann, Eva & Voracek, Martin & Bock, Christine & Kirchler, Erich, 2017. "Tax compliance across sociodemographic categories: Meta-analyses of survey studies in 111 countries," Journal of Economic Psychology, Elsevier, vol. 62(C), pages 63-71.
    12. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551.

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