In various departments of politics and political economy of a number of foreign academic institutions – one which readily comes to mind is that in the Australian National University (ANU) – studies are quite advanced on the topic of the relationship between taxation defiance and government.

Taxation defiance takes various forms, ranging from the blatant, open and outright (naturally often legitimately and seriously punished) disobedience of legally stipulated taxes to continuously engaging the taxmakers in smart, often nitpicking, evasion schemes, whose creators then enjoy tackling the State’s enforcement structures at both the departmental and court levels. For them then the question of time often becomes irrelevant.

Studying the pathways of such defiance reveals that it takes both resistant and dismissive forms. The latter is what often ends up causing the State most harm, in that – in inflation cost terms – all attempts to recoup, even with interest, long unpaid taxes, end up being a fiscal deficit contributor extending over long periods, often of massive extent. And the issue of prescription certainly makes a big contribution to complicating matters. Some of the studies to which I refer, with perhaps the main one being that of ANU’s Valerie Braithwaite, make use of motivational posturing theory, plus panel data sets, to track the relationship between taxpayers and their State over various numbers of years. 

There probably are as many attitudes and views of the fiscal State as there are taxpayers: every taxpayer is just that, an individual (personal or corporate) with mores and attitudes towards the State that evolve and change over time, in sometimes surprising ways.

Any State’s fiscal policy, and its implementation, is a very serious matter requiring constant study and updating

So a tax-legislating State’s fiscal policy, seen not from the purely collective, economic or numerary viewpoint, but rather from that of fiscal philosophy, is very often an immensely delicate matter, insofar as its interpretation by taxpayers themselves gives rise to whatever levels (and/or resultant subterfuges resorted to) a country collectively ends up having for resisting and dismissing authority in a democracy. 

Wise legislators should normally be on a constant watch for these societal mores. Being always ready to resort to a careful choice of correcting measures in a way also amounts to a form of testing society’s commitment to democratic principles and the integrity of government. 

And the wise legislator will never ignore that any form of resistant defiance expresses disapproval of the way an authority is operating, besides of course signalling to the government a need to improve its performance and win, or retain, public confidence.

The upside of this is that as and when an authority claws back its institutional integrity, various (not all) forms of resistant defiance weaken. 

The other form of defiance, viz dismissive defiance – which various economic studies consider to be more costly to the State in monetary terms – is not equally responsive. At times, in fact, parts of society simply enjoy playing off whatever patterns – for example, the electoral cycle – they detect in a government for their own personal interests.

Choosing to ignore this issue of the relationship between defiance in taxation and government can, over time, also often bring about a serious impact on another important issue, namely social capital.

The failure to manage with justice and wisdom any growing gaps between the haves and have-nots in a society can bring about the collapse of social capital. That of course sets off the society anew on the merry-go-round of having to recover it through often even tougher fiscal action.

All of this in synthesis means that any State’s fiscal policy, and its implementation, is a very serious matter requiring constant study and updating.

John Consiglio teaches in the Faculty of Economics, Management & Accountancy of the University of Malta, was chairman of the Board of Special Commissioners (Income Tax) for ten years and chairs the Revenue Remissions Supervisory Board. He is writing in his personal capacity.