Research designed for real policy choices

Governments often need to reduce subsidies or increase regulated prices, but fear that public opposition will make reform politically or socially unworkable.

Opposition depends on more than the size of a price increase. Phasing reforms in, targeting high-consuming households, providing compensation and clearly explaining the rationale can substantially increase public acceptance.

Governments can test competing reform packages before implementation, identify which groups are most likely to resist, and determine which forms of compensation and communication are most credible.

A tax system can be progressive overall while still treating people with similar incomes very differently. These inequalities may weaken perceptions of fairness and trust in the system.

Employees can pay considerably more tax than self-employed people earning the same income. Citizens across six countries care about this unequal treatment, but the policy solutions they favour cannot always be inferred from their concerns alone.

Combining tax microsimulation with surveys allows governments to assess both the distributional consequences of reform and how citizens understand the trade-offs involved.

Governments frequently try to improve compliance through enforcement or taxpayer communication. These measures may be less effective when people believe the underlying tax system is unfair.

People report greater willingness to pay tax when they learn that taxes and transfers are progressive. Their willingness falls when they learn that the system is less progressive than they had believed.

Tax administrations can consider fairness alongside enforcement — examining how the design of the tax system, and the way its distributional effects are communicated, may affect voluntary compliance.