Why Young People are Less Compliant on Tax: Enduring or Transient Defiance ?

Abstract

One of the more consistent predictors of tax non-compliance has been age: Younger people are less compliant in attitude and behaviour than older people. Some interpret this finding as youthful defiance that young people will “age through.” Others ask if tax systems are losing some of their credibility in modern day democracies. Using data from the Community Hopes, Fears and Actions Survey, this paper confirmed that young people are less compliant and have a relatively poor pro-tax sensibility. However, less behavioural compliance on the part of young people could not be explained satisfactorily by their poor pro-tax sensibility. When age and pro-tax sensibility were compared as predictors of compliance across a number of specific compliance outcomes, variables of personal tax ethics and preference for honest tax advice (tax morale variables) were far more important determinants of compliance than the age of the taxpayer. Australia’s taxpaying culture, rather than its youth culture holds the key to high tax compliance.