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Home > IPLJ > Vol. XXXIV > No. 1 (2023)

 

Limor Riza

Abstract

This Article systematically evaluates the effectiveness of governmental media campaigns and considers whether we should invest in educating society via such campaigns to increase tax compliance, primarily in light of the intrinsic flaw of taxation.

Is a radio spot that starts with the sound of scary footsteps approaching you, followed by an announcer who says in a deep and intimidating voice, “we’re closing in on undeclared income,” effective? To answer those questions, this Article proposes and showcases a four-step analysis—the ARMS scheme (Aim, Reason, Media-Methods, Sorting). First, the government’s aim of increased tax compliance is identified and declared (Step I: Aim). Second, because the discrepancy between tax payments and government expenditures can lead taxpayers to evade payment, various reasons and motivations for evading tax are explored, including those of rational and irrational taxpayers with a particular focus on the unrequited motive (Step II: Reason). The unrequited motive refers to the motive to avoid paying taxes because tax payments do not directly correlate to the return provided by the government back to the taxpayer. Third, various types of media campaigns (deterrence, boasting, damage, and assistance campaigns) utilized to increase tax compliance are systematically analyzed (Step III: Media-Methods). Finally, the types of compulsory payments involved are then sorted (Step IV: Sorting).

By using this ARMS scheme, this Article shows that although there is a single aim—tax compliance—there is no single modus operandi to mitigate tax evasion via media campaigns given their various forms and evasion motives. In general, the tax literature so far has examined the effectiveness of media campaigns without making distinctions based on evasion motives. This Article argues that campaigns can only be effective if those motives are taken into consideration in light of the type of media campaign used. This Article classifies varying media campaigns into categories of deterrence, boasting, damage, or assistance types. Moreover, the type of compulsory payment is also relevant to the analysis.

This Article concludes that, given these requirements, the only media campaign type that may be effective for all rational evader types is deterrence. Nevertheless, boasting and damage campaigns can affect a certain group of rational evaders: those who also take the unrequited nature of taxation into consideration. Additionally, most media campaign types—primarily boasting and damage (and to some extent also deterrence)—are effective means to address the unrequited motive. To highlight the correlation between tax compliance and the public good, taxpayers need to be informed on how their taxes are used. Governments should implement mechanisms to effectively communicate with those taxpayers in line with an ideal of “no taxation without communication.” Media campaigns can be that mechanism to deliver such information to overcome tax non-compliance.

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