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Res05


Tax matters: are rules made to be broken? 
Convenorss:
Robin Smith (University of Oxford)
Nicolette Makovicky (University of Oxford)
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Chairs:
Miranda Sheild Johansson (University College London)
Discussants:
Matti Erasaari (University of Helsinki)
Stream:
Resistance
Format:
Panel
Sessions:
Thursday 24 June, 10:00-11:45 (UTC+3)

Short Abstract:

This panel investigates the ways that tax matters in society, focusing on the making and breaking of tax rules. We question the assumption that taxation is always just, and challenge contributors to examine how tax rules and their contestation may be produced and enacted beyond the state's realm.

Long Abstract

Tax is an inextricable part of life. Tax matters to families, businesses, and states in that it reflects economic and social values. It highlights the inner workings of power, tensions between state and society, and the fault lines between different social, economic, and ethnic groups. Its paper documentation and digital processes create tax matter - the materialization of rules and the social contract. This panel seeks contributions investigating the myriad ways that tax matters in society, focusing on the making and breaking of tax rules. We question the assumption that taxation is necessarily just, or that ‘breaking’ tax rules is necessarily about compliance. While rules guide taxation, they require citizen consent. People may break the rules of taxation regimes perceived as unjust. ‘Breaking the rules’ when it comes to tax can thus equally reference the state breaking the social contract from the citizen’s perspective. Indeed, we challenge contributors to examine how tax rules – and their contestation – may be produced and enacted beyond the state’s realm. Rules are an outcome of social practice, not just policy, and thus tax ‘rules’ are also about what a group of people deems the right way to do something. Thus, we ask, how does making and breaking tax rules form part of everyday economic, social, or religious life? How are tax rules related to notions of common sense and public secrets? Can we say that ‘rules are made to be broken’ when it comes to tax?

Accepted papers:

Author:

Atak Ayaz (Graduate Institute of International and Development Studies (IHEID))

Paper short abstract:

By highlighting consumers' reactions to taxes and "the wine bureaucracy" in Turkey, this paper questions the relations between producers and consumers that re-shape the trust-based relationship and value in the food/wine sector.

Paper long abstract:

Turkey's small-scale and quality-oriented wine industry only dates to the late 1990s and early 2000s. Even though only thirty years passed, consumers not only show interest in the taste of bottles but also are well-informed about the "book-keeping" of wineries and the costs of production. At the beginning of July 2020, Turkey announced the latest semi-annual hike in special consumption tax, which is responsible for exorbitant increases in the price of alcohol. Soon after, a Facebook post occurred in a wine aficionados' group that hosts numerous wine consumers and high-end producers from Turkey. Following detailed mathematical outcomes of the recent tax addition, the author stated that they were ready to boycott wineries that were implementing the rise by drastically increasing their bottle prices.

Although consumption taxes are ordinary in numerous countries, its level on all kinds of alcohol products in Turkey is higher than the EU's average. This can be read as the indicator of the stance of the ruling Islamic conservatist and pro-capitalist Justice and Development Party (AKP) toward alcohol production. In this paper, I focus not only on the utilization of taxes by state authorities to support their ideologies but also discuss how producers instrumentalize taxes to legitimize the pricing of their bottles. By highlighting consumers' reactions to taxes and "the wine bureaucracy" in Turkey, this paper questions the relations between producers and consumers that lie at the center of new-consumerism and ecologies of production (Paxson 2013) that re-shape the trust-based relationship and value in the food/wine sector.

Authors:

Karen Boll (Copenhagen Business School)
Jaana Kettunen (University of Jyväskylä)

Paper short abstract:

This paper focusses on tax authorities’ regulation of large corporations. By looking at a case in Denmark and Finland, we analyze relations between corporations showing transparency into their tax matters and authorities providing predictability. Based on this we discuss fairness and favoring.

Paper long abstract:

This paper discusses challenges of fairness versus favoring when large corporate taxpayers are regulated by tax authorities. It reports a case study of how large corporate taxpayers are being regulated within the so-called Cooperative Compliance program in Denmark and Finland. This internationally renowned regulatory program has been scrutinized through in-depth qualitative studies in both countries. The program forms a regulatory relation based on collaboration and has a specific set of ‘parts and aims’—reflected in its similarity in Denmark and Finland. Based on this shared ground, we show that in both cases when the program is brought into operation by the tax authorities, this brings about a number of challenges related to how transparency and predictability are negotiated and enacted in the relations. We will present how respectively tax officials, tax directors and tax advisers understand these processes of providing transparency and predictability. The challenges imbued in this regulatory craft lead to a discussion about how this particular form of regulation is fair or whether there is some kind of favoring of certain actors. This discussion links to the panel on “Tax matters” as it precisely shows “the making of” tax compliance and questions how and which kind of “justice” this creates for the actors.

Author:

Marija Norkunaite (University of Oxford)

Paper short abstract:

In the Baltics, the Russian-speaking residents’ identity as taxpayers becomes one of the main means for them to claim deservedness as fully-fledged members of the national community. However, their readiness to pay taxes diminishes if the state is perceived as breaking the social contract.

Paper long abstract:

This paper is based on an ethnographic study of three predominatly Russian-speaking former socialist cities in the Baltics: Visaginas in Lithuania, Daugavpils in Latvia, and Sillamӓe in Estonia. In the national Lithuanian, Latvian, and Estonian states, the Russian speakers can claim their membership as minority subjects only. The more so, in the Baltics, the Russian-speaking residents of these three cities in particular are imagined as alien and threatening to the national state “others.” Thereby, my Russian-speaking interlocutors’ identity as taxpayers becomes the main means for them to claim their deservedness and equity as fully-fledged subjects in what is now a national state. Even if Russian-speaking residents do not belong to the titular nation or do not hold citizenship altogether, they contribute to the state budget in the same manner as any other ethnically Lithuanian, Latvian, or Estonian citizen. Even so, my interlocutors’ motivation to be good, taxpaying subjects diminished if they perceived the “state” as the one breaking the social contract. My interlocutors did not see taxes merely as a manifestation of a “fiscal exchange”. The most important for them was the reasoning behind the state tax policy. Tax noncompliance was argued to be acceptable when the “state” was imagined as self-interested – or even “anti-human” – machine existing for itself and creating policies for its own benefit, rather than for the people. If the state treated them as nothing but yet another source of money to be extracted, then my interlocutors also did not feel morally obliged to comply.

Author:

Ida Hughes Tidlund (Stockholm University)

Paper short abstract:

In Åland, tax rules are one of three pillars in the autonomy’s constitutional foundation. The customs border determines trade, purchases, finances and employment. But pragmatic approaches to the rules are common, and breaches committed out of necessity rather than disobedience.

Paper long abstract:

“If you follow the rules strictly, there’s a limit. But… let me tell you, people stuff their cars so full. They declare nothing.” This slightly revised quote was said by an interview participant living in the Åland islands, regarded as a third territory with respect to indirect taxation in the European Union. For Ålanders, tax rules immerse daily activities. In an ongoing PhD project about bordering processes around the Åland islands, the customs border plays a crucial role as it influences so many societal levels; to a large degree, it finances the region’s vibrant economy, it is a repeated topic in discussions between the state and the autonomy, and it requires alert and active navigations by individuals shopping online or anywhere outside the islands. The many breakings of the tax rules are not due to defiance or spite, but that the system is so intricate that even the board of one of Åland’s largest business has been charged for tax fraud. In the presentation, I aim to illuminate how these hurdles of the tax border have come to create a parallel system in which individuals and authorities give one another more leeway in tacit consent, and the many navigations performed by people when trying to figure out whether a specific item falls under the legal, or the unwritten local order.

Authors:

Lotta Björklund Larsen (University of Exeter)
Lynne Oats (University of Exeter)

Paper short abstract:

This paper revisits the work with recent quantifications of the tax gap in Sweden and the U.K. We consider the political framing of these tax gap calculations, where the appropriation of the gap ‘number’ by the commentariat has important implications for the management of tax rule breaking.

Paper long abstract:

(This paper is co-authored with Lynne Oats, University of Exeter.)

The tax gap is an increasingly common mechanism for assessing the mismatch between tax that theoretically should be collected, and tax that is actually collected. Many are the countries that attempt to estimate what can be conceived of as a ‘revenue loss’ and where rule breaking looms large. The work of quantifying the tax gap has assumed almost a mythical status, presumed to be an accurate reflection of a real phenomenon. Simple in theory, full of caveats in practice, this is a number that causes quite a stir when published: “Imagine the good policies that could be implemented if all due tax was collected”! Politicians and public administrators steer compliance policies according to the development of the tax gap, tax administrations see a shrinking tax gap as a sign of success and media and stakeholders make all sorts of comparison based on this fickle number.

This paper revisits the work with recent quantifications and calculations of the tax gap in Sweden and the United Kingdom. We consider the political framing of these tax gap calculations, where the appropriation of the gap ‘number’ by the commentariat has important implications for the management of tax rule breaking.