Efficacy Of The ATO Compliance Model

psychological separation without apprehension of loss (James, 2002).

As per the responsive regulatory strategy of income tax compliance, using cooperation is best option. The reasoned response is to try cooperation first, irrespective of the posturing of the non-compliers. The Task Force of Australian tax office was tasked to know the dynamics of the cash economy, to build partnerships with the community, and to introduce incentives to enhance income tax compliance, and to enforce income tax compliance through flexible sanctions. The Task Force recommended the development of a compliance behavior that would support the fair and reasonable treatment to income tax payers, confidentiality of the tax data and provision of timely assistance and tax advice on tax disputes (Murphy, 2002).

The soft approach of persuasion and dialogue is as vital as the strict enforcement measures. On base of these tax regulatory efforts is the Taxpayers’ Charter guarantying protection of the rights of income taxpayers. According to the responsive tax regulatory model, dialogue, persuasion and sanctions may be used to enhance income tax compliance. The efficacy of strategies of dialogue and persuasion rely on a cohesive culture. The ATO Compliance Model stresses on building a broad base to the pyramid, where consensus is developed on income tax compliance definition, strong pledge to doing the right thing and adopting the respectable behavior (Alley, 2002)

Revenue administration, if trusted, could boost the revenues (Wahl & Kirchler, 2010). This crucial aspect inspire and motivate people to follow the tax code. On the other hand, taxpayers choose diverse non compliance dimensions and legal ambiguities when they do not rely tax mechanisms. Moreover, tax audit and penalties could boost revenues as