Measuring the Impact of Communications on Atlantic Canadian Homeowners’ Attitudes towards Underground Economic Activity – Phase 1 – Pre-Campaign Test

Prepared for the:
Public Affairs Branch
Canada Revenue Agency
FINAL REPORT
June 2010
POR #092-09
Contract #46558-114816/001 CY

Prepared by:
Corporate Research Associates

Le rapport complet en français sera fourni sur demande.

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Canada Revenue Agency
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Executive Summary

Corporate Research Associates, Inc.
Contract Number: 46558-114816/001 CY
Contract Date: 2010-02-10

Context and Methodology. The Canada Revenue Agency (CRA) has mandated the creation of a new initiative to measure the impact of the CRA’s actions on future compliance behaviour in the underground economy in Atlantic Canada. In this context, the CRA commissioned Corporate Research Associates Inc. to undertake, at a total contracted project cost of $94, 189.40 plus HST, the Measuring the Impact of Communications on Atlantic Canadian Homeowners’ Attitudes towards Underground Economic Activity - Phase 1 – Pre-Campaign Test study. The Agency has developed a broad communications strategy that would target homeowners in Atlantic Canada as part of the overall underground economy strategy. The primary objective of the present research is to measure the impact that the communications strategy has on the attitude of Atlantic Canadian homeowners towards tax non-compliance in the construction and home renovation sectors in Atlantic Canada. Specifically, the research is seeking to better understand: Homeowners’ attitudes toward their own participation in non-compliance via the underground economy; Homeowners’ attitudes towards other homeowners’ non-compliance via the underground economy; and Attitudes toward suppliers’ non-compliance via the underground economy in the construction and home renovation sectors.

To achieve these objectives, a two-phased research approach was designed. This report encompasses the first phase of the research, called the pre-campaign test, whereby two survey periods (Wave 1 and Wave 2) act as a baseline measure prior to introducing a communications campaign. A cross-section of randomly-selected homeowners in major Atlantic Canadian municipalities was surveyed by telephone at two different time periods during the pre-campaign test. Wave 1 of the pre-test was conducted between February 25 and March 24, 2010, and Wave 2 was conducted between April 6 and April 28, 2010. In addition to surveying in Atlantic Canada, five communities outside of Atlantic Canada were selected to ‘match’ the Atlantic Canada municipalities (excepting one Atlantic Canadian community, for which no match was found), and these matched communities were surveyed during the same time period. In total, approximately 130 interviews were conducted in each of the seven targeted Atlantic Canada municipalities, and five non-Atlantic municipalities, over the course of two pre-campaign survey periods (i.e., Wave 1 and Wave 2). That is, Wave 1 of the pre-campaign test entailed 1,573 interviews, and Wave 2 of the pre-campaign test entailed 1,577 interviews, resulting in a total of 3,150 interviews.

Following completion of pre-testing, the communications campaign is now occurring in Atlantic Canada over the next several months. A post-campaign test ("Phase 2" of the research), again entailing two waves of interviewing akin to the pre-campaign test, will then take place. The discussion in the current report focuses primarily upon the following pre-campaign test comparisons: All Atlantic respondents (i.e., Wave 1 and Wave 2) compared with all Non-Atlantic respondents (i.e., Wave 1 and Wave 2). The results of this survey could be generalized to the overall populations of homeowners within the surveyed communities, recognizing the limitations presented by the study’s margins of error and confidence intervals.

Results. Findings from the pre-campaign test of the Measuring the Impact of Communications on Atlantic Canadian Homeowners’ Attitudes towards Underground Economic Activity study suggest that Atlantic Canadian homeowners are generally familiar with tax rules and obligations relating to home construction, renovations, and repairs. Specifically, the majority of homeowners in Atlantic Canada understand specific implications of not accurately reporting or paying taxes. For example, most Atlantic Canada homeowners understand that without a receipt or a written contract they could face financial risks or do not have a means of protecting themselves. They also understand that verbal assurance is not as binding as a written contract, and without a signed contract they put themselves at risk if a worker is hurt on the job. That said, three areas receive lower ‘preferred responses’: homeowner protection in the event of poor quality of work; coverage involving workers’ compensation benefits for workers who are injured on the job site, and whether or not the verbal assurance from a business that performs home construction, renovations, and repairs is as binding as a written contract.

Comparing Atlantic homeowners with Non-Atlantic homeowners for questions relating to tax rules and obligations reveals only four statistically significant differences, whereby in each instance Atlantic respondents are more likely than Non-Atlantic respondents to: a) understand that if work is of poor quality, the law does not protect homeowners who do not have a written contract; b) workers who get hurt on the job are not always covered by workers’ compensation benefits; c) if a homeowner avoids paying taxes on home construction, renovations, or repairs, it reduces the amount that can be spent on programs such as healthcare and education; and d) if a homeowner avoids paying taxes, somebody loses.

Respondents were asked four compliance-related questions concerning the Canada Revenue Agency’s ability to uncover tax cheating. Atlantic and Non-Atlantic homeowners believe the Agency should work harder to reduce tax cheating by Canadians, although they also believe the Agency is doing a good job of advising the public about tax obligations and requirements. There is limited agreement that the Agency takes steps to ensure homeowners pay applicable taxes on home construction, renovations, and repairs, and the vast majority of Atlantic homeowners believe the Agency would not know about cash transactions unless they are declared on an income tax return. Atlantic respondents and Non-Atlantic respondents offer similar responses for these questions, although Atlantic respondents overall are more likely to disagree that the Agency would not know about cash transactions, when compared with Non-Atlantic respondents overall, and this difference is statistically significant.

Atlantic homeowners are somewhat familiar with the concept of the underground economy, and indeed are more likely than Non-Atlantic homeowners to have heard of the term ‘underground economy’ (here again, this difference is statistically significant). In addition, when asked to rate how common they believe it is for homeowners to conduct construction, repairs, or renovations by way of the underground economy, the vast majority of Atlantic homeowners aware of the underground economy believe it is very or somewhat common. The majority of homeowners who have paid for a construction, renovation, or repair job ‘under the table’ feel that it was worth the risk to do so. Finally, among Atlantic homeowners as well as non-Atlantic homeowners, it is much more likely that a homeowner would consider paying for a $100 construction, renovation, or repair job ‘under the table,’ as compared with a $10,000 job.

In terms of current advertising awareness, a small percentage (10%) of homeowners, both Atlantic and Non-Atlantic, report recently seeing, hearing, or reading advertising relating to the risks associated with paying ‘under the table’ for home construction, renovations, or repairs. Those who saw this advertising report seeing it on television or in the newspaper. It should be noted that the CRA was not conducting any communications or outreach activities at the time the pre-testing survey was conducted. It should be noted it is not uncommon for small percentages of respondents in surveyed populations to relay via pre-test interview waves that they have recently seen, heard, or read advertisements concerning the subject matter being examined. Recall of such advertising may indeed occur even though no such advertising was sponsored, during the timeframe and within the regions under examination, by the organization (in this instance the Canada Revenue Agency) planning to subsequently undertake an advertising campaign on this subject matter. Such ‘pre-test recall of advertising’ situations arise perhaps owing to various factors, such as incorrect advertising recall, the presence within a local market of an actual advertising campaign sponsored by an unknown third party organization, and so on.

Date modified:

2010-09-29