Perceived Corruption Reduces Trust in Tax Systems, Survey Shows

The latest biennial survey conducted by three financial professional organizations shows that across the globe, concerns over how tax revenue is spent diminishes overall trust in tax authorities and governments, although accountants and tax professionals are generally viewed favorably.

These are among the chief findings in the 2023 Public Trust in Tax survey conducted by the Association of Chartered Certified Accountants (ACCA), the International Federation of Accountants, and Chartered Accountants Australia and New Zealand. The survey takes a temperature gauge of 7,700 G20 members, this time omitting Russia and including New Zealand.

While 67.8% of respondents indicated that paying taxes is “linked with sustainable development,” a slight majority (53.8%) also responded that suspicions of corruption is a “major factor” impacting their attitudes towards tax.

“I don’t think it is fair that [the tax authority] does deals with multinational companies if they don’t pay their tax, while the little man gets prosecuted to the full extent of the law,” one respondent was quoted in saying within the report. “Why are multinational companies above the law?”

“As long as corruption, collusion and gratuities are still rampant in my country, most people, including me, are not very enthusiastic about paying taxes,” said another.

This was the first year the survey included a question about corruption. The report observed, based on the survey results, that individuals “for whom corruption is a concern” tend to favor tax incentives “of all types,” particularly in the areas of green energy, infrastructure, and retirement. Politicians and tax authorities are less trusted by this group are “slightly more trusting” of accountants and lawyers relative to those with less worried about corruption.

“Most of the comments expressing concern about misappropriation of tax receipts, or discomfort with government spending, focus on politicians and tax authorities,” the report explained. “However, there is another aspect of a broken system that often crops up—the perception that large businesses, and sometimes wealthy individuals, are able to engage with the system in a way that gives them an unfair advantage and enables them to pay less tax than they should.”

There was some surprise among the surveyors that corruption hawks were more prepared to pay far larger amounts of “extra tax” to support sustainable development initiatives, particularly environmental projects. The report identifies climate change as “arguable the greatest risk facing our world today” and concludes with making the case for the inextricable link between tax revenue collection and addressing long-term environmental threats.

It notes there is “no widespread support for significant” tax hikes to fund green energy projects. Instead, improving the taxpayer experience and simplifying tax regimes bolsters “tax morale,” a term the report defines as “tendency for individuals and businesses to pay their tax voluntarily and without intervention by tax authorities.” Boosting tax morale, the surveyors argue, goes “hand in hand” with closing tax gaps.”

Yet, tax morale is impeded when individuals and businesses believe that their tax dollars are not properly invested, instead enriching corrupt government officials, the survey showed. “Throughout the course of these surveys, public unease about how tax moneys are spent has been a constant theme in respondents’ comments,” Helen Brand, chief executive of ACCA, said in a statement. “Perceptions of corruption are a clear barrier to engagement with the tax system. Accountants have a central role to play in countering corruption, bringing transparency and accountability to the collection and spending of taxes across both public and private sectors.”