As the title suggests, this is a book about the role of trust in tax systems. The topic is remarkably ambitious, and abstract, for a tax book. It is not about black-letter tax law, nor yet about compliance with that law, but about the conditions under which compliance can thrive. Things are made more difficult still by the fact that trust is not easily measured, verified or even defined. In effect, the editors are throwing down a challenge in the face of more conventional explanations of taxation: trust may be difficult to pinpoint, but tax systems cannot be fully understood without an account of it.
This task is unpacked by the editors into four main elements, being the respective relationships of trust with tax theory, tax ethics, economic globalisation and behavioural science. Each of these headings compasses a wide range of subject matter and there is considerable overlap between them. For instance, the discussion of tax theory in Part I involves discussions of Ancient Greek taxation, endowment taxation and the ideas of Sloterdijk, Rawls, Hobbes and Polanyi. The essays in Part II discuss variously the existence of shared values within society, the destructive potential of lobbying, the constructive potential of corporate social responsibility and the influence of demographics on tax policymaking. Part III complements more technical treatments of international taxation with discussions of protests against tax avoidance, cross-border scrutiny of tax policy, selfishness in international negotiations, the emergence of a multi-polar world and the legitimacy problems with the resort to soft law where legally binding standards cannot be agreed. There is an initially startling, but in fact well-judged change of tack in Part IV, with three empirical studies examining popular support for redistribution, wealth taxation and tax evasion respectively.
This is a garden of bright images for a tax reader, yet the volume has some contentious features that are accentuated when the essays are read in piecemeal fashion and without the benefit of internal dialogue between authors. First, there is a widespread use of flexible terminology such as “neo-liberal”, “a society solely organised by the logic of the market”, “influence”, “fair share”, “responsibility”, “distributive justice” and “contemporary norms and values of society”. These words are capable of relatively precise meaning but can nevertheless give the impression of assertion, or at least of permitting readers to import their pre-existing opinions. This may be inevitable in a collection the whole purpose of which is to convince the reader of the importance of the concept of trust, itself difficult to define with precision. It is also alleviated by the tendency of multiple authors to examine similar problems from different angles. For example, there are some rather speculative suggestions that increased participation in policymaking processes will increase support for redistributive taxation, but these must be read alongside theoretical analyses and empirical evidence elsewhere in the volume that tell a more complicated story. Although this speaks well of the editorial process, there is a risk of individual chapters being cited discretely for conclusions that they cannot easily bear, without reference to the alternative views available elsewhere in the volume. In balance, it should be noted that some topics often prone to superficial treatment are examined with uncommon thoroughness in this book, with Hans Gribnau's discussion of Rawls and Vos's commentary on the EU's implementation of BEPS (governmental solutions to tax avoidance through base erosion and profit shifting) providing excellent reference material.
The second contentious feature of the book is that it is admittedly exploratory, and indeed contains some quite surprising ideas. Willem Lemmens and Jo Badisco cite Lon Fuller in support of the proposition that “a well-ordered society relies on common goals, values and ideals and on an active identification of the citizens with this common morality”. This is not strictly inconsistent with Fuller's focus on procedural values as a way of supporting rather than hindering the ability of individuals to choose for themselves between a wide array of substantive values. However, in the context of the authors’ earlier statement that “to bring to realisation the bonum commune every citizen has to contribute his fair share … the fair contribution of every citizen of company has to be in line with what we more or less intuitively see as the fair distribution of the tax burden” (emphasis added), an obvious inference is that Fuller can be adduced in support of this type of substantive morality, which seems difficult to square with the approach that he set out in The Morality of Law. Another surprising moment is when Peter Essers compresses his sophisticated analysis of international tax policymaking into the claim that “we need more ‘Habermas’ and less ‘Machiavelli’”. This is admittedly shorthand, but Machiavelli is associated not only with selfishness but also with effectiveness, a baseline of which would seem to be indispensable for the development of trust. Tarcisio Magalhaes's claims for the transformative potential of multi-polar governance are encouraging but there is scarce detail on the identity, characteristics and methods of alternative poles for a sceptical reader concerned about the intentions of powerful but non-democratic governments. Finally, Paul Faulkner's redistributive reading of Nozick is eye-opening and provocative, although deliberately so. It would be interesting to see how more conventional Nozickians respond.
Third, there is the treatment of taxpayers across borders. To put the point bluntly, too much time is spent wondering why rootless businesses are not respecting their roots. It is not obvious, for example, why multi-national companies ought to be loyal to a particular jurisdiction or how ideas of “fair share”, “social contract” or “bonum commune” ought to apply across borders. The risk again is that these words are transformed into empty rhetoric but are cited in future publications as if they have a settled content. It is characteristic of this book, however, that some of these tensions are at length resolved across the book and particularly in Part III. An example is the interesting idea of Allison Christians that if a taxpayer engages in lobbying activities within a jurisdiction, it is implicated in the political community and in some of the obligations of that community. Tensions between multi-lateralism and democracy are observed by Essers, Magalhaes and Maria Luisa Guermani, and Cees Peeters also shows that democratic engagement is not confined to voting and in some respects is exercisable beyond national borders.
The fourth area of contention is the scope of the word “trust” itself. On the whole, the volume is successful in convincing the reader of the importance of looking at trust alongside the more definite aspects of tax law and administration. As with any such concept, however, there are certain limits outside which its explanatory power diminishes. Accordingly, there are a number of respects in which the book comes very close to the heart of tax issues but then reaches the edges of what trust is capable of explaining. The following are indicative examples:
I. Rule of law. There are likely to be cases in which taxpayers and authorities have no intention of investing in trusting relationships beyond what is strictly necessary for a transactional approach. A company pursuing a limited investment in a jurisdiction, for example, might expect to pay tax according to the law of that jurisdiction but not suffer expropriation, harassment by officials or requests for bribes. This can of course be framed in terms of trust, but arguably other concepts such as the rule of law and institutional capacity have greater explanatory power.
II. Tax justice terminology. The book abounds with tax justice terminology, but this is not necessarily synonymous with trust and there may even be cases in which the two conceptual frameworks divide in opposite directions. Broadly speaking, discussion of distributive outcomes fits more naturally within a justice framework with trust typically playing a secondary role at best.
III. Appearance and reality. It is unclear whether the key priority for tax compliance is the existence of trustworthy behaviour within the system or the appearance of it. In a descriptive sense the latter seems more likely and this gains some support in the book from Katharina Gangl, Erich Kirchler and Christian Lorenz, but this has the odd corollary that uncovering corruption could be said to harm tax compliance by decreasing the appearance of trust. There is a similar problem with proposals to democratise taxation, which could either increase trust by involving taxpayers in decisions that affect them or decrease trust by increasing the supply of false and inaccurate information. It is not clear what independent role trust plays here.
IV. Salience. As tax specialists we assume that voters and taxpayers care about tax all the time, whereas the likelihood is that even the deepest scandals only exercise a proportion of the population and even that only sporadically. If the preferred position of many taxpayers is indifference punctuated by occasional and minimal compliance effort, trust may simply be a more marginal phenomenon than is suggested throughout this book although the avoidance of widespread distrust is likely to remain important to tax authorities.
The book is less to be criticised for failing to resolve these types of questions than congratulated for raising them in the first place. It is also timely, coinciding with an apparent loss of confidence in the legitimacy of institutions within rich countries, often exacerbated by deliberate attacks by populists promising easy answers to intractable problems. The responses of the contributors to this volume are occasionally quite miscellaneous taken individually, but Building Trust in Taxation is an example of that rare beast, the edited collection that is greater than the sum of its parts. The volume reads as a sophisticated academic conversation, with each contributor having a characteristic voice of their own but at the same time responding to, adapting to and criticising each other's perspectives. It is rather a privilege to be given a window into these workings. The book is not easily available as an electronic book and, for once, this is probably an advantage. It encourages the reader to adopt the traditional approach of beginning at the beginning and ending at the end, an effort which is amply rewarded.
