On 24 November 2021 the OECD issued the second edition of Building a Tax Culture, Compliance and Citizenship: A Global Source Book on Taxpayer Education. The report on taxpayer education is one element of the OECD work relating to tax morale. Relevant data is being compiled in relation to the factors affecting tax morale, with reference in particular to developing countries.
The publication provides an analysis of 140 taxpayer education initiatives across 59 countries and classifies the different approaches to taxpayer education, considering the challenges encountered and solutions developed. More than 80% of the taxpayer initiatives appeared to have resulted in improved tax morale and increased motivation to pay taxes. This demonstrates that greater tax literacy can help to create a tax culture where the taxpayers understand the effects on their society of paying taxes.
Taxpayer education can therefore increase the willingness of individuals and businesses to pay their taxes, leading to greater mobilisation of tax revenues that can help achieve the Sustainable Development Goals. Improved methods to increase tax revenues are especially important following the impact of the COVID-19 pandemic.
The report aims to assist tax authorities to implement taxpayer education projects taking into account their local situation. The taxpayer education could be done through teaching tax by means of long-term engagement with various sections of society, such as the youth or people starting businesses. Education could also be carried out by engaging with taxpayers and raising their awareness of tax compliance issues through social media campaigns or other media such as television. The approach to taxpayer education could make use of behavioural approaches that communicate in a way designed to encourage positive compliance.
Taxpayer education could also involve practical assistance to taxpayers on using the various tools available such as electronic filing. Taxpayers could be given direct support in carrying out their tax obligations in areas such as reporting their income. Electronic returns can be used to give advice as the taxpayer is completing the tax return and to highlight arithmetic or other errors in the return before it is filed.
The OECD study points out that taxpayer education can be done by other organisations in addition to the tax administration. Other stakeholders in taxpayer education include schools, trade and business associations and other non-governmental bodies.
Educating taxpayers is not just the business of tax administrations. Many of the initiatives presented in this study demonstrate the value of effective partnerships with other stakeholders such as schools, business associations and non-governmental organisations.
Monitoring and Evaluation of Taxpayer Education
Only around half the taxpayer education initiatives covered in the OECD report were subject to evaluation of their effects. There is a need for improved evidence to be collected to evaluate the impact of taxpayer education initiatives. The analysis that was done was generally focused short-term impacts, even though some of the main aims of taxpayer education related to long-term objectives. The analysis and evaluation of the long-term impact of taxpayer education initiatives is difficult but it is important for understanding how to improve the impact of taxpayer education.
