Message Testing for Proposed Compliance Advertising Campaign

Prepared for the:
Public Affairs Branch
Canada Revenue Agency
FINAL REPORT
February 2008
POR# 283-07
Contract #46558-086425

Prepared by:
Ipsos Reid Corporation

Le rapport complet en français sera fourni sur demande.

To request a full copy of this report, please contact Library and Archives Canada at:
613-996-5115 or 1-866-578-7777 or www.collectionscanada.ca

Media Enquiries:
Media Relations
Canada Revenue Agency
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media.relations@cra-arc.gc.ca

EXECUTIVE SUMMARY

Ipsos-Reid conducted 16 focus groups nationwide with Canadians screened to exhibit attitudes of being less likely than the average to fully comply with tax laws. The purpose of this research was to test messaging for a potential tax compliance advertising campaign. Participants were asked to volunteer their own ideas for themes and messages, as well as to evaluate five proposed messages that could be featured in a campaign designed to discourage people from avoiding taxes. This discussion followed a more general debate of the issues surrounding taxes and the ethical and practical reasons to pay or avoid paying them.

Participants were well aware of methods of avoiding taxes and most felt that the practice of avoiding taxes is very widespread. Tax avoidance was generally seen as "wrong" or "illegal," and yet there was a considerable degree of sympathy for ordinary people who avoid paying their taxes. Indeed, there seemed to emerge a double standard, whereby wealthy and powerful tax avoiders are seen as using their position to navigate and even to manipulate the system, while lower-income workers who conceal some of their earnings are seen to be doing what they need "to get by."

The ethics of tax avoidance were viewed largely in light of how government spends the money that it collects through taxes. Most participants were of the opinion that government wastes taxpayers' money, and that ordinary individuals do not get sufficient value from the taxes they are expected to pay. This view was exacerbated by perceived weaknesses in the healthcare system and a shortage of government assistance to those who need it. Additionally, the government's budgetary surplus was interpreted as evidence of a superfluous level of taxation. Nevertheless, many participants recognized these arguments as rationalizations for avoiding taxes and admitted that financial need or simple greed were the bottom-line reasons why people avoid paying their taxes.

Avoidance of taxes was also seen as reasonably safe, since most participants believed that people who avoid taxes generally get away with it. Severe penalties for avoiding taxes were seen as exceptional, and therefore the consequences of being caught were considered to be a mere annoyance rather than an effective deterrent.

As the discussion turned to the topic of advertising that would encourage people to pay their taxes in full, participants were first asked to suggest the themes and messages that they thought would be most effective. This discussion generated variations along two broad themes: 1) messages about what the government pays for using the money collected through taxes, and 2) messages about the personal consequences of avoiding taxes.

Both of these themes were considered educational in nature. In the first instance, participants were split over whether the message should be positive and upbeat (in order to appeal to a sense of social responsibility) or more negative and guilt-inducing, for instance by emphasizing the consequences to the healthcare system of a lack of funds. The second theme was seen as an opportunity to emphasize the personal dangers of avoiding taxes, thereby helping to increase the deterrent effect of the consequences. Of the two themes, most participants found the first most appealing and considered it to be a more effective option, though some insisted that tax avoiders would be more readily moved by the threat of consequences.

Following this idea-generating portion of the discussion, participants were presented with five different messages that might feature in a campaign designed to discourage tax avoidance, and were asked to rank them from most effective to least effective. These five messages, in order of perceived effectiveness, are:

• It is wrong to avoid or underpay taxes since taxes pay for key government services such as health care, education and social services.
• Avoiding or underpaying taxes is extremely risky and puts those who do it at risk of heavy fines and possibly even time in jail.
• People who pay for services "under-the-table" to businesses that aren't reporting their income run huge risks that range from damage to their home and property to liability for injuries to those performing the under-the-table work.
• Avoiding or underpaying taxes is unfair because it means that those who pay all the taxes they owe are paying more than those who underpay.
• Businesses that avoid or underpay taxes not only cheat the public, they also have an unfair competitive advantage over businesses that don't cheat.

Participants liked the idea of advertising that makes a case for why taxes should be paid by explaining how tax dollars are spent. While many participants did say that tax avoiders could be shamed into paying all that they owe if they knew that taxes were essential to paying for public services, others convincingly questioned whether those who avoid taxes for personal gain could be moved by an appeal to altruism or whether they would believe or agree with the message that taxes pay for important services in view of the fact that so many see government as wasteful.

Participants expressed no warmth towards the message that fines and prison await tax cheaters. However, those who viewed this message as effective recognized that tax cheats are motivated by self interest. Communicating to tax avoiders in the language of self interest by describing the personal consequences of their behaviour would serve as an effective counterweight to the financial benefits they may realize. Furthermore, messages about consequences do not engage the rationalization that government wastes tax dollars or spends them improperly.

On the other hand, many participants felt that the system of tax enforcement lacks credibility. People who pay severe penalties for avoiding taxes were seen as rare cases that flouted the law and invited attention, not as object lessons to others who avoid paying taxes more inconspicuously. Participants felt that it would be too difficult to convince most tax avoiders that the risks are real and the consequences severe.

Two key conclusions therefore emerge from this research:

• Messages about what taxes pay for are appealing, but guilt is not seen as an effective motivator.
• Messages about the consequences of avoiding taxes are seen as distasteful, but compelling.

The key recommendation emerging from these conclusions therefore is to develop a hybrid approach to advertising that includes both messages.

As a final qualification, it is important in any advertising to make the examples real and tangible. Participants reacted poorly to the use of statistical information on its own. If the advertising is about what taxes pay for, the examples need to appeal to a broad user base (health care, education and public infrastructure are examples participants mentioned) and, if possible, draw on local examples. If the advertising is about the consequences of avoiding taxes, data on the number of tax cheats caught was seen as less effective than information about the severity of the penalties in store for tax avoiders. It is also important to dispel the notion that tax avoidance is something that only wealthy people get caught for and underline the fact that "ordinary" people are also caught. The fine line in this messaging is to avoid raising the reaction that "ordinary" tax cheats are sympathetic figures unjustly persecuted by the government.

Date modified:

2008-05-22