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The ATO Compliance Model was developed by the Cash Economy Task Force between 1996 and 1998 (Commonwealth of Australia, 1998a). The model drew on two theoretical frameworks from regulation responsive regulation (Ayres and Braithwaite, 1992; Braithwaite, 2002 based on fieldwork described in Braithwaite, 1985; Grabosky and Braithwaite, 1986) and motivational posturing (Braithwaite, Braithwaite, Gibson, and Makkai, 1994; Braithwaite, 1995). Both theoretical frameworks are grounded in data from surveys, observations and interviews relating to regulators and regulatees in action. These data, collected in different settings, were interpreted against a background of social science theory, most notably reactance theory (Brehm and Brehm, 1981), procedural justice theory (Tyler, 1990, 1997), self-categorisation theory (Turner, 1987), defiance theory (Sherman, 1993) and reintegrative shaming theory (Braithwaite, 1989; Ahmed, Harris, Braithwaite and Braithwaite, 2001). Ideas and data were then pulled together to develop the theoretical frameworks described in more detail below.

In April 1998, the Australian Taxation Office (Tax Office) adopted a policy of responsive regulation of tax compliance by small firms in the building and construction industry. Known as the Australian Taxation Office Compliance Model (ATO Compliance Model), the new approach is grounded in past research into regulation of business entities. As seen by its promoters, it promises to improve significantly tax compliance in the cash economy. Drawing from survey and interview data, we explore the Tax Office’s capacity for successful implementation of the ATO Compliance Model. Specifically, we examine the extent to which it had the leadership and staff commitment to implement the policy successfully. We also explore whether or not project field-level staff saw merit in the program and eventually came to support it. We conclude by examining whether the owners of small building and construction firms changed their perspectives on the Tax Office and tax compliance following introduction of the ATO Compliance Model.

This paper reports on the perceptions and early experience of staff in the Australian Taxation Office (Tax Office) with responsive regulation. The Tax Office adapted responsive regulation to take the form of the Australian Taxation Office Compliance Model (ATO Compliance Model), which was introduced into the Tax Office in early 1998. Between December 1998 and July 1999, interviews were conducted with operative staff in Tax Office branch offices to determine the extent of staff acceptance and use of the ATO Compliance Model. These interviews examined perceptions of legitimacy of responsive regulation, and barriers to its adoption. Most of those interviewed thought the Compliance Model ‘made sense’. Generally, interviewees saw the Model as legitimate because it encouraged creativity, increased job satisfaction, improved staff communication, and raised awareness of the needs of taxpayers. There were both organisational and individual barriers, which resulted in some resistance to the ATO Compliance Model. However, resistance was more than balanced by enthusiasm. Overall, the changes required within the organisation to adopt responsive regulation were cultural, organisational and personal. Operative staff recognised the need for these changes, looked for intrinsic reward and were keen to acquire the skills needed to regulate responsively. This paper should be read in conjunction with Centre for Tax System Integrity Working Paper No. 28, which reports on interviews with senior Tax Office staff who championed the implementation of the ATO Compliance Model.

This paper reviews empirical evidence on the extent of and type of involvement of Australians in the cash economy. Survey data were collected from a random sample of Australians in 2000 and 2002. The results show that cash economy activity is scattered throughout the population and tends to be undertaken by different people at different times. For most of the population, the amount earned and spent in the cash economy is less than $5,000 per year. In general, Australians know cash economy activity is illegal and think it is wrong, but they seem to accept such behaviour as commonplace and part of the landscape of success and survival in a competitive world. This paper shows connections between the formal and informal economies - those who have jobs in the formal economy tend to be those with jobs in the cash economy, and people believe cash transactions of this kind occur because workers want to avoid tax and employers want to avoid superannuation, insurance and other compensatory payments.

Data from the Community Participation and Citizenship Survey are used to explore the factors that influence people to place trust in strangers and impersonal others. We use Putnams social capital thesis to explore whether civic engagement and associational membership are major factors in the development of generalised or social trust, and whether this kind of trust is generalisable to trust in government institutions, specifically the Australian Taxation Office. There is partial support for Putnams thesis that civic engagement develops social trust. More important is affective trust which is developed in the family and through familiar others. We find that trust is generalisable, being extended to strangers and to the impersonal others in government institutions. It is trust that builds trust and government institutions like the Tax Office begin their task with benefits accrued through generalised trust.

In April 1998, the Australian Taxation Office (Tax Office) adopted a policy of responsive regulation of tax compliance by small firms in the building and construction industry. Known as the Australian Taxation Office Compliance Model (ATO Compliance Model), the new approach is grounded in past research into regulation of business entities. As seen by its promoters, it promises to improve significantly tax compliance in the cash economy. Drawing from survey and interview data, we explore the Tax Office’s capacity for successful implementation of the ATO Compliance Model. Specifically, we examine the extent to which it had the leadership and staff commitment to implement the policy successfully. We also explore whether or not project field-level staff saw merit in the program and eventually came to support it. We conclude by examining whether the owners of small building and construction firms changed their perspectives on the Tax Office and tax compliance following introduction of the ATO Compliance Model.

Today we’re talking about trust and relationship management in the delivery of government services. That involves cooperation between government agencies and the community. How can we trust that the community will cooperate? Well that’s easy many might say - the law and the use of contracts, sanctions and audits ensures that we can trust others. The law allows us to trust others because we all know what is expected of us and we all know what will happen if we don’t do what is expected. The law is important but I suggest to you that this is a narrow view of trust – because the law, contracts, and monitoring are never perfect. We may be talking about control rather than trust. That is a rational view of trust, and it forgets something very important, something so basic we often don’t even realise it. And that is that trust is also relational – trust is the basis of our social relationships, not only with those we know personally, but with strangers and with government departments. I prefer Einstein’s view that cooperation is based primarily on trust and only then on reliance on the law. Trust is first and foremost a moral orientation or a social bond with others.

Data from the Community Participation and Citizenship Survey are used to explore the factors that influence people to place trust in strangers and impersonal others. We use Putnams social capital thesis to explore whether civic engagement and associational membership are major factors in the development of generalised or social trust, and whether this kind of trust is generalisable to trust in government institutions, specifically the Australian Taxation Office. There is partial support for Putnams thesis that civic engagement develops social trust. More important is affective trust which is developed in the family and through familiar others. We find that trust is generalisable, being extended to strangers and to the impersonal others in government institutions. It is trust that builds trust and government institutions like the Tax Office begin their task with benefits accrued through generalised trust.

This paper reviews empirical evidence on the extent of and type of involvement of Australians in the cash economy. Survey data were collected from a random sample of Australians in 2000 and 2002. The results show that cash economy activity is scattered throughout the population and tends to be undertaken by different people at different times. For most of the population, the amount earned and spent in the cash economy is less than $5,000 per year. In general, Australians know cash economy activity is illegal and think it is wrong, but they seem to accept such behaviour as commonplace and part of the landscape of success and survival in a competitive world. This paper shows connections between the formal and informal economies - those who have jobs in the formal economy tend to be those with jobs in the cash economy, and people believe cash transactions of this kind occur because workers want to avoid tax and employers want to avoid superannuation, insurance and other compensatory payments.

This paper reports on the perceptions and early experience of staff in the Australian Taxation Office (Tax Office) with responsive regulation. The Tax Office adapted responsive regulation to take the form of the Australian Taxation Office Compliance Model (ATO Compliance Model), which was introduced into the Tax Office in early 1998. Between December 1998 and July 1999, interviews were conducted with operative staff in Tax Office branch offices to determine the extent of staff acceptance and use of the ATO Compliance Model. These interviews examined perceptions of legitimacy of responsive regulation, and barriers to its adoption. Most of those interviewed thought the Compliance Model ‘made sense’. Generally, interviewees saw the Model as legitimate because it encouraged creativity, increased job satisfaction, improved staff communication, and raised awareness of the needs of taxpayers. There were both organisational and individual barriers, which resulted in some resistance to the ATO Compliance Model. However, resistance was more than balanced by enthusiasm. Overall, the changes required within the organisation to adopt responsive regulation were cultural, organisational and personal. Operative staff recognised the need for these changes, looked for intrinsic reward and were keen to acquire the skills needed to regulate responsively. This paper should be read in conjunction with Centre for Tax System Integrity Working Paper No. 28, which reports on interviews with senior Tax Office staff who championed the implementation of the ATO Compliance Model.

In April 1998, the Australian Taxation Office (Tax Office) adopted a policy of responsive regulation of tax compliance by small firms in the building and construction industry. Known as the Australian Taxation Office Compliance Model (ATO Compliance Model), the new approach is grounded in past research into regulation of business entities. As seen by its promoters, it promises to improve significantly tax compliance in the cash economy. Drawing from survey and interview data, we explore the Tax Office’s capacity for successful implementation of the ATO Compliance Model. Specifically, we examine the extent to which it had the leadership and staff commitment to implement the policy successfully. We also explore whether or not project field-level staff saw merit in the program and eventually came to support it. We conclude by examining whether the owners of small building and construction firms changed their perspectives on the Tax Office and tax compliance following introduction of the ATO Compliance Model.