In order to build an effective Tax Administration towards promoting national and regional development we as tax administrators have to ensure that our customers, both internal and external are properly treated and well taken care off. Our taxpayers must be made to feel satisfied. The relationship between we tax officers and our customers must be a good one in order that we get them to comply.

Today, a lot depends on self compliance. We depend on tax payers to complete and file tax returns or pay taxes by a due date. Without these tax returns and most importantly the taxpayer’s money our job will be extremely difficult. Therefore we must find ways of making our jobs easier.

One means of achieving that goal is for Tax administrations to undertake effective publicity and education campaigns. This paper will show that publicity and education campaigns are critical elements to increase public awareness and encourage taxpayers to comply with the requirements of the tax legislation. It will also highlight some publicity and education campaign methods that may bring about effective results.

Information about taxation should be well publicized. Not many persons like to hear about taxes. Education about what the State does with the taxes that people pay should be encouraged on a grand scale. Persons should be reminded that the services that are provided at the hospitals, the construction of roads and bridges, the construction of schools, police stations and other government facilities are all as a result of the tax dollar. If persons know that their monies are being spent wisely there will be all the reason to make payment.

In any organization, information is one of the most important tools that can be employed to effect change. Some of that information includes statistical data that can assist business decisions as well as information concerning the operation and objectives of the departments concerned, the services that are available to tax payers and guidelines and instructions for the use of taxpayers.

How do we go about informing and educating our tax paying public? We need to use a wide range of methods that will reach those who pay taxes, persons who do not pay (defaulters) and those who are not yet in receipt of an income and may pay some day. In other words, we need to reach out to every single person. We must develop educational programs to inform existing and future taxpayers. Those who are not directly affected by the tax system may be able to pass on what they have heard or learnt to others who are directly affected by taxation. For example students who have learnt certain things on taxation have been able to inform and assist their parents thus encouraging them to comply with the tax obligations.

The public needs to be informed of their duties and responsibilities under the tax laws in a way that can be easily understood by even the less educated taxpayers. It is important that tax administrations conduct different types of information campaigns for different types of taxpayers (e.g., tax return preparers, accountants, special trade associations, employers and the general public). These campaigns would be necessary for disseminating information on rulings, regulations, decisions, and other notifications, in order to foster a higher level of compliance and minimize misunderstandings of the tax laws and regulations. In countries which have launched a reform without having effective taxpayer publicity and education campaign, taxpayers have misunderstood new taxes and procedures, and have hindered the reform process.

Privacy and Secrecy during Publicity

Publicity is a fundamental principle of democracy. The right to free speech contains within it the right to hear or to know. The combination of these two rights ensures a democratic government operating under the rule of law and free from the corrupting influences. The same rationale underlies the argument for tax publicity. Publicity, however, often clashes with another fundamental right—the right to privacy. The debate about any publicity law, then, revolves around whether the benefits of publicity outweigh the intrusions into privacy that publicity produces.

In most or all tax legislations there is provision for secrecy and the non-disclosure of taxpayers’ information. Proponents claim that publicity can prevent taxpayer fraud and evasion as well as prevent “maladministration” of tax laws, including “favoritism” by tax officials. By keeping the system honest, publicity increases taxpayer confidence in the fairness of the system, which in turn has the salutary effects of increasing voluntary compliance and revenues.

A large portion of publicity should be educational. Voluntary tax compliance requires this type of publicity. Taxpayers must know the law and know something about tax administration in order to comply. Many tax administrations provide that sort of publicity, such as the publication of the law, regulations and rulings on tax cases. Most of this type of publicity does not involve specific taxpayer data, but even when it does, it is not necessary to strip away all privacy.

Again, there are existing examples of publicity of taxpayer information that protect privacy - statistical compilations, for example, reveal taxpayer data without breaching privacy at all and even rulings on tax cases maintain privacy in most situation. Such publicity can be considered more as an effective compliance tool since much and can be accomplished without seriously compromising any taxpayer’s privacy.

Provide Accurate Information

To be able to provide effective service to taxpayers the tax administration must understand the needs and expectations of taxpayers. This will enable the administration to provide accurate information and use all the possible methods available to inform and educate taxpayers. No matter how compliant a taxpayer wants to be, he/she will fail if he/she (or his/her tax preparer) does not know the law sufficiently well to determine the proper amount of tax.

Obviously, knowledge of the specifics of the tax law as it applies to the individual taxpayer can eliminate all sorts of unintentional failures to comply ranging from failure to file, claiming improper deductions, or misstating income. Knowledge about the tax system can also eliminate intentional non-compliance by increasing perceptions that the system is fair.

Preparation for an Effective Implementation

Once a decision to implement a new tax on a given date is taken, or a proposed change in the law is to become effective on a particular date, it is recommended that the tax authorities deliver public announcements to avoid distortions in public opinion about the new tax or law. Also, a publicity campaign needs to be set up to gain momentum as the implementation date approaches.

To undertake a successful publicity campaign and accomplish a successful implementation of a tax or the successful introduction of a new law, it may be necessary to set up a team to run the campaign. The team will have the responsibility to make information available to as wide an audience as possible. Possibilities include the setting up a help telephone line, a contact address for written enquiries, as well as talks, seminars, lectures and public meetings. Often the members of the introduction team participate in radio and TV shows and organize consultations with certain groups and associations.

The tax administration should use all the publicity and education campaign methods available and should emphasize the benefits and importance of a new tax or a new law. However, if would be important that countries use the publicity methods that are best suited to its region and its culture.

Prior to the introduction of the Value Added Tax in Dominica in 2006, several publicity campaign methods were used. Some of the methods used included television, radio, newspapers, brochures, talks, seminars, town hall meetings, consultations, as well as an advertising float during the parade of carnival bands.

Methods that may be used for publicity and education campaigns

Publications

Guides, booklets and brochures may be used to inform and educate the public with information on the different tax types. For example information on the nature of a tax, the tax rates, when the tax is due, penalties that are applicable, the filing of returns etc. can be included in these publications.

Media

Television, Radio or News papers may be used to air programs or publicize tax matters and events. Appearances on Television and Radio by tax officials assists in building a relationship between the tax department and the public particularly where the public is given the opportunity to call and ask questions. During such programs education of the public on numerous matters is tremendous. Also, advertisements could be aired during popular programs or published on the largely circulated newspapers.

Press releases may be issued by Tax Departments to announce proposed changes in the law, a change in the administration’s practice or some other change or initiative of interest to the public.

Many tax administrations usually organize tax fairs, tax awareness sessions and other activities that may be recorded and rebroadcast on television or radio. Lots of important information which is disseminated at these events could reach the public through this medium since the viewing and listening public is quite large.

Tax Clinics and Special Information Booths at fairs

Administrations can make use of the opportunity to showcase their products, talk to persons who attend those fairs and share much needed information. The Department of Inland Revenue, Barbados is noted for organizing its annual tax fair which attracts numerous people.

Video Cassettes or DVDs

Video Cassettes or DVDs on various important tax issues can be shown at tax offices for the public to view while awaiting service. Quite a bit can be learnt in the short time one stands in line waiting to make a payment.

Presentations at Seminars

Tax administrations should embrace the opportunity to deliver presentations at seminars and workshops organized by voluntary organizations, trade unions, associations and other groups. At such sessions a diverse group of taxpayers can be educated. Tax administrations could organize their own town hall meetings where relevant issues can be addressed.

Schools and Youth Groups

Educating the youth is very important and is a very effective means of spreading tax information. Going to the schools to deliver lectures on taxation assist students in preparing for the business world. In Dominica we have always been amazed to see the level of enthusiasm displayed by students when these sessions are organized. Lots of questions are asked and we have always been asked to do repeat sessions.

Stakeholders meetings

Administrations should ensure that meetings are held with those who are directly affected by some issue or with those to who a particular law applies.

Websites

A very important and effective means for publicity and education is the use of websites. There, the Inland Revenue can make available to the world up to date information on a wide range of topics. Some of the things found on the websites of tax departments are: information on taxes, information on filing, tax news, frequently asked questions (FAQ), tax laws and lots of tax educational material.

Conclusion

These are just some of the methods that may be used in publicity and education campaigns. If they are used effectively, the success of the program will be tremendous. The needs of stakeholders, particularly that of taxpayers, will be met resulting in improved compliance, increased revenue and a more effective Tax Administration.

References

LeBaube, Robert A. and Charles L Vehorn, 1992, Assisting Taxpayers in Meeting Their Obligations, in Improving Tax Administration in developing Countries, ed. By Bird and Casanegra de Jantscher (Washington: International Monetary Fund).

Paulo dos Santos, 2002, Vat Introduction – Administration Issues CARTAC

Silvani, Carlos and Baer, Katherine, 2003, Designing a Tax Administration Reform Strategy: Experiences and Guidelines, IMF Working Paper.