Perceptions of tax and participation in the cash economy: Examining the role of motivational postures in small businesses

A significant concern of the Australian Taxation Office (Tax Office) in recent years has been to combat the cash economy. In order to do this the Tax Office has developed the ATO Compliance Model which is based upon the theory of responsive regulation (Ayres & Braithwaite, 1992). It is recognised within this framework that the willingness of tax payers to voluntarily comply with their tax obligations is critical for the tax system to operate efficiently. This has meant that understanding taxpayers attitudes toward the tax system is important both for engendering voluntary compliance and for framing responses when non-compliance is detected. These issues are of particular concern in relation to small businesses and especially so in those industries that are perceived as being high risk (Cash Economy Task Force, 2003). A qualitative study was conducted in which used car dealers from the Canberra region were interviewed about their attitudes towards participating in the cash economy. Particular attention was paid to exploring their attitudes towards the tax system, through the concept of motivational postures (Braithwaite, 2003), and the way in which these postures relate to self-reported participation in the cash economy and perceptions of the Tax Office