September 13, 2022
By Michael Cohn
Taxpayers trust professional advice and tax authorities, according to a new global survey, but are less sure about politicians and the press.
A report released Tuesday by the Association of Chartered Certified Accountants and the International Federation of Accountants found that in relation to the tax system, people have the highest level of trust in professional tax accountants, with 67.1% saying they trust or highly trust them, and professional tax lawyers at 64.6%. Across the sample in the survey, 41.2% of respondents reported using the services of a professional accountant to manage their tax affairs.
Respondents demonstrated a clear belief that accountants play a positive role, contributing to a more efficient (71.9%), more effective (70.2%) and fairer (67.4%) tax system.
ACCA and IFAC surveyed 5,600 people across 14 countries and found that overall, people trust the tax authorities, but opinions are polarized and a significant minority (27.9%) either distrust or highly distrust their tax authority. Politicians were the least trusted people with respect to the tax system, with a net "trust deficit" of –25.7%. Social media reports were the only other category showing a net trust deficit at –8.6%. Unfortunately the press isn't trusted much more than politicians and social media. While media reports show a small net positive balance (8.1%), 9.4% of the respondents indicated they highly distrust media reports, and a 22.2% distrust them.
"This new survey comes at a time of uncertainty as governments around the globe come to grips with the consequences of the COVID-19 pandemic and the implications of the Russian invasion of Ukraine," said ACCA chief executive Helen Brand during an online panel discussion Tuesday hosted by ACCA, IFAC and the Pan-African Federation of Accountants. "Preexisting global megatrends and challenges such as climate change and changes in population patterns have highlighted the importance of creating a more sustainable and importantly fairer world. The importance of tax systems in building resilient economies cannot be overstated."
She cited research from the IMF that economic growth goes hand in hand with a consistent stream of tax revenues. "The challenge for governments over the next 30 years will be to fund health and social care, infrastructure development and the needs of an aging population against the backdrop of resource and environment challenges," said Brand. "This is particularly true for developing economies, which are at the heart of our new survey, where existing resources and capacity to collect are already stretched. This puts additional pressure on governments to find responsible ways to spend more while at the same time facing an unprecedented trust crisis. It's a vicious circle: The lack of trust threatens a key resource enabling any government across the world to meet today's challenges, in other words tax revenues, but without tax systems, governments cannot fund the initiatives to build that trust, and without that revenue governments cannot deliver on the UN's Sustainable Development Goals."
"As professional accountants, we do our part in the development of sustainable economies and sustainable societies," said IFAC president Alan Johnson. "As we look to the future of our profession, both in the private and the public sector, and in the broader movement to sustainability, it is also important that we look more deeply and understand what is holding us back. Corruption and crime-related issues, such as money laundering, bribery, illicit financial flows and fraud are significant obstacles to economic development and economic growth as well as human development, and ultimately to the achievement of the 17 United Nations' sustainability goals. The UN estimates that you need between $5 and $7 trillion of investment annually to achieve the SDGs, but at the same time today you lose something like $3.6 trillion, or half of what we need to invest to deliver the SDGs to corruption, whether it is lost to governments or indeed to society. We could never afford to lose this amount of money before the pandemic and we certainly cannot afford to lose it today. The global profession has an important role to play here because we're uniquely placed as trusted advisors to businesses and governments, to support an ecosystem which includes all actors, both privately and in the public sector and nongovernment organizations, to ensure that public policy addresses the needs of society because that is important if we really do want to work in the public interest."
He noted the IFAC has recently released an action plan for fighting corruption and economic crime (see story or listen to podcast). "In every country we studied, we heard that the problems in tax systems have less to do with collecting taxes and much more to do with how taxes are used," said Johnson. "We have found that attitudes toward tax are largely driven by the population's views on corruption. Trust in the tax system is lower when taxpayers perceive higher levels of corruption and the diversion of funds. There are many connections here between the tax system, sustainable development and public financial management."
People want to see tax systems used to target specific positive outcomes, according to the survey. Nearly three-quarters of the respondents strongly support the use of tax incentives to target 'global megatrends' such as climate change (73.8%) and the aging population (72.8%). The survey found that 73.9% of respondents support the use of tax incentives to attract multinational business while 69.3% support cooperation between countries to create a more coherent international tax system.
The respondents generally believe that taxpayers are paying a reasonable amount of tax. Across the entire sample, respondents were more likely to agree than disagree that specific taxpayer groups were paying a reasonable amount of tax. This applied to various groups, including average- or low-income individuals, high-income individuals, local companies, and multinational companies. Nearly half the global respondents (46%) said multinational companies were most likely to be paying a reasonable amount of tax. However, in seven of the G20 countries, more respondents disagreed than agreed that multinationals are paying a reasonable amount of tax. Across the wealthier countries as a whole there was a net positive balance across the survey respondents of only 22.4%. Attitudes toward tax minimization were more relaxed than in the G20 surveys, with only minimization by low- or average-income individuals attracting a net negative score in more than one country. The attitude toward tax minimization by low-income individuals was the most deeply split category, with strongly negative scores in six countries almost equal to the aggregate positive scores in the other eight.
Across the entire sample, online services ranked as the most commonly used service in managing tax affairs, being selected by 42.2% of respondents, compared to 36.9% of respondents among the G20 countries surveyed last year.