Around the world, governments collect hundreds of millions in tax revenue from citizens who grumble about having to pay. This year, as many struggle to get to grips with the COVID-19 pandemic, things are a little different. But still, the tax deadline looms.
As citizens we know many of these tax dollars are earmarked for essential services such as education and healthcare. We all benefit from these services and yet, some Canadians go to extreme lengths to minimize their personal tax bill. In fact, personal tax avoidance has resulted in an estimated $8.7 billion tax deficit.
To understand more about our aversion to taxes, researchers from Simon Fraser University and the University of British Columbia conducted four studies. Drawing on a representative sample of Americans, as well as Canadian undergraduate students and data from the World Values Survey, they investigated the impact of ‘prosociality’ on taxation.
Prosociality is the tendency to engage in behaviour that benefits others, even when costly for yourself. This could mean giving blood, volunteering, or donating to charity. But could it help improve perceptions of, and engagement with, taxation?
In short, yes.
In two studies, the team taxed students paid for participating in a research project. One group was told they would be taxed at 20% to support an on-campus student society. The other was reminded of the society’s services (a student newspaper, radio station etc.) and invited to contribute as much as they chose.
Participants were then questioned about their views on the tax and how much money they would willingly contribute.
Unsurprisingly, reinforcing the social impact of the tax helped taxpayers see their contributions in a more positive light. In fact, the more participants thought their tax dollars would help others, the more they were willing to pay.
Survey data from 500 Americans, and 474,000 individuals in 107 countries reinforced that taxation is seen in a more positive light when taxpayers believe that their contributions are effectively helping others.
“These findings align with a growing body of research underscoring the pro-social nature of human behaviour,” says SFU psychology professor and study author Lara Aknin.
Importantly the effect appears to hold irrespective of existing perceptions of taxation and various socio-economic demographics.
For Emily Thornton, lead author of the paper, this raises an optimistic perspective on taxation, and an intriguing opportunity. Showing people how their tax dollars help others could mean more support for taxation, and more people paying their share.