Taxpayer compliance effects of enhancing taxpayer rights - a primer for discussion of a dedicated research agenda

There is a welcome continuing Australian and global tax administration policy focus on ensuring adequate protection of taxpayer rights. This policy focus is, in part, driven by a presumption that enhancing taxpayer rights will lead to greater taxpayer voluntary tax compliance through the fostering of a climate of trust and confidence between taxpayers and tax officials.

However, the acceptance of a positive correlation between enhancement and awareness of taxpayer rights and willingness to comply implies a presumption that terms such as fairness (or trust) and taxpayer rights are synonymous. This paper questions this presumption, arguing that fairness and trust are much broader concepts which are difficult to conceive of as rights. Consequently, concepts such as fairness and trust are poor analogues for taxpayer rights.

Further, this paper argues that there is a dearth of clear empirical evidence to support any unimpeachable presumption of a correlation (positive or otherwise) between enhanced taxpayer rights and greater taxpayer willingness to comply, let alone evidence as to the strength of any such correlation if it, in fact, exists. The paper takes the argument further, pointing out that even if such a correlation can be shown to exist and its strength measured, there is a need for research which adds nuance to our understanding of any such correlation in order to provide useful guidance to policymakers considering making specific legislative changes to strengthen and/or clarify particular taxpayer rights. This paper makes the case for developing a dedicated research agenda capable of providing that guidance.