By Dela Ahiawor
A new tax survey of 5,900 people in14 countries across the globe –with majority of the participants in developing countries, including Nigeria and Kenya, revealed that; trust in tax systems is lower when taxpayers perceive higher levels of corruption and diversion of public funds.
As well, the new tax survey/ study dubbed, Public Trust in Tax, by accountancy bodies: Association of Chartered Certified Accountants (ACCA) and the International Federation of Accountants (IFAC) says lack of trust in politicians is a major barrier to tax engagement with the systems. “Citizens don’t object to paying tax – they object to misappropriation.”
Looking at data emanating from Nigeria and Kenya, Jane Ohadike, regional head of public affairs at ACCA, in a press note to DEL REPORT said : ” The Data from these two countries show that fairness is a great motivator of tax compliant behaviour. Taxpayers trust professional accountants with the highest prevalence of trust in Nigeria and Kenya following closely.”
She added that: “Giving the critical state of public finances across Africa, both countries have shown the profession actively engaging with government and relevant agencies to influence tax reforms toward progressive fair systems and the expansion of the tax base. These ongoing activities validate as well as inspire further trust in the role professional accountants play in driving effective, efficient and fair contribution through the tax systems.”
For her part, Helen Brand, chief executive of ACCA said: “Fighting corruption is such a central priority for the global accountancy profession because corruption has such negative implications for trust, tax morale and sustainable development more broadly. We know from research by the IMF that economic growth goes hand in hand with a consistent stream of tax revenues.”
According to Brand, the new survey builds on previous research, and for the first time includes data from developing countries outside of the G20. With the UN predicting that the highest population growth up to 2050 is set to happen in non-G20 countries, this edition of Public Trust in Tax looks at issues impacting an increasing share of the global population. The survey was backed up by a series of roundtables to explore attitudes further.
In a bid to fight corruption, the International Federation of Accountants (IFAC) recently released its Action Plan for Fighting Corruption and Economic Crime, with broad support from the global accountancy profession. The plan outlines specific actions that members of the profession can take, individually and in concert, to engage in a meaningful way in the fight against corruption. Kevin Dancey, chief executive of IFAC noted that: “Given the correlation between perceived levels of corruption and citizens’ willingness to pay taxes, this plan is an important effort to help ensure that citizens see the benefits of their tax dollars.”
Finally, the fact remains that corruption is a great threat to sustainability ( sustainable development), as it negatively impacts the five pillars of sustainable development: people, planet, prosperity, peace and partnerships.
Fighting corruption, thus points the way to a better world by 2030. It’s of vital importance to achieving the global goals (SDGs), particularly SDG 16: Peace, Justice and Strong Institutions. Read the survey’s key findings below:
Trust and corruption
Politicians are widely distrusted with a net trust deficit of -25%. In contrast professional tax accountants and lawyers are trusted (67.1% and 64.6% respectively). Attitudes to tax authorities are split with a significant minority – 27.9% – distrusting or highly distrusting them.
Roundtable participants saw lack of trust in politicians as a major barrier to tax engagement with the systems. Citizens don’t object to paying tax – they object to misappropriation.
In the survey 46.4% agreed that multinationals were paying a reasonable amount of tax. This contrasts with Public Trust in Tax surveys in G20 countries showing only 22.4% agreed.
Attitudes towards tax minimisation are more relaxed in developing countries with respondents more likely to agree that specific taxpayer groups were paying a reasonable amount of tax.
People strongly support the use of tax incentives to target megatrends such as climate change (73.8%) and ageing population (72.8%).
Tax incentives were seen as a way of attracting multinational businesses to invest (73.9%) and build a more coherent international tax system through co-operation between countries (69.3%)
Author of the report Jason Piper says: ‘An efficient, effective and trusted tax administration is one building block in the sound structure of society. This survey shows that the problem lies not with the collecting of tax but what happens afterward. A lack of accountability in government spending fosters the perception – and all too often the reality – of corruption in government.’
Since 2017 ACCA and IFAC have been gathering data across the G20 on attitudes and opinions of the general public. The latest survey is the first to look beyond the G20 and comes at a crucial time for economies across the globe, given uncertainty following Russia’s invasion of Ukraine and the Covid-19 pandemic.