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From responsive regulation to dynamic participation: A new model for voluntary tax compliance


The cooperative compliance model that has been adopted by the Australian Taxation Office (ATO) to improve voluntary compliance sets out the proposed regulatory action of the ATO in response to the motivational posture of the taxpayer. When there is a dispute between the ATO and a taxpayer, the trust that the ATO has engendered in the taxpayer is purported to convince the taxpayer to comply voluntarily.

This article argues that the cooperative compliance model is too narrow to achieve further improvements in voluntary tax compliance and that tax administration in Australia needs to be expanded to include the effects of political participation and fiscal exchange. This article proposes that tax compliance be modelled as a dual dynamic participation mechanism that gives primacy to the role that taxpayers have in voluntary tax compliance. In this mechanism, taxpayers participate in the democratic process in order to influence the government’s policies and pay taxes in order to fund the democratically-approved public goods and services.

Taxpayers then evaluate the public goods and services provided by government and increase or decrease their tax compliance behaviour and their participation in politics in the next tax period in response. Taxpayers and other citizens also change their levels of political participation in response to a number of cues that are external to the model. Therefore, to improve voluntary compliance beyond existing levels, the whole of government must bear responsibility for it by striving to provide public goods and services that citizens need and prefer as well as mobilise citizens to increase their participation in politics.

In addition, the responsibility for voluntary tax compliance rests with the entire community since citizens must be prepared to take up opportunities to participate in politics so that the likelihood of receiving the desired and necessary goods and services in an efficient and effective manner is increased.

Author profile

Dr Robert Whait CTA
Rob is a Lecturer in Taxation, Centre for Accounting, Governance and Sustainability, School of Commerce, University of South Australia. - Current at 14 December 2012
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