To comply is not to obey
Compliance is not imposed: it is built when the State learns from the society it governs.
Tax administration, legitimacy of the state and social pact
It is often stated that the objective of the tax administration is to “achieve voluntary compliance with obligations”. This expression contains a paradox: can the State really manage compliance? Or can you only manage the conditions that make it possible?
Managing implies planning, organizing, directing, and supervising, with responsibility for the final result of the system and that result —compliance— depends largely on something that is outside the institutional circuit: the social will to comply.
Compliance is not an administrative variable or an order that can be imposed by decree, it is a social behavior and social behaviors are not administered: they are induced, favored, or deteriorated according to the conditions that the State generates.
As long as the system only processes declarations, controls differences and executes debts, it does not manage compliance; it manages consequences of non-compliance, manages conflict, not balance.
Compliance and institutional coherence
People comply when they understand the why of the standard and trust the ”why” of the contribution, control is still necessary, but it cannot be the organizing axis of the system.
The axis should be the coherence between norm, economic reality, and social satisfaction, when that coherence is broken, non-compliance ceases to be an individual anomaly and becomes a systemic phenomenon. It is not just a fault; it is a symptom.
Without an instance that analyzes why compliance is not being met — which policy generated resistance, which service produced informality, which regulatory design turned out to be dysfunctional – compliance is not the object of administration: it is an expected result without management of its causes.
Today, the tax administration administers procedures, files, and tax credits, but it does not administer social trust, perception of equity or institutional legitimacy, variables that determine compliance behavior.
Understanding rather than punishing
Tax non-compliance is not explained solely by the opportunity to evade or by an alleged lack of fiscal morality, it often responds to structural factors: perception of injustice in public charge, low quality of services, distance between the State and citizenship, informality as a survival strategy.
A Modern institution should not limit itself to detecting non-compliance; it should investigate its causes and feed back to the State to correct them.
In this sense, sustainable compliance is not born of fear, but of institutional trust, regulatory coherence, and the conviction that the contribution has a verifiable social return.
Compliance is an indicator of the balance of the social pact.
The institutional contradiction
An inevitable question then arises: can an institution whose function is to collect and control aim to ensure that compliance derives from the legitimacy and fairness of the State, without participating in the management of those attributes?
The legitimacy, equity and usefulness of the State occur in the design of spending, the quality of services, distributive justice, and the coherence of public policies. They do not occur in the window or in the algorithm.
Assigning the tax administration the responsibility of establishing legitimacy without granting it the ability to influence the underlying causes amounts to an effort without a clear purpose. This is institutional rhetoric.
Tax compliance is not a purely administrative problem: it is a political result of the functioning of the State.
Can the state manage compliance?
The answer is clear: you cannot manage it directly. You can manage rules, procedures, services, information systems, and coercion mechanisms. But you do not manage people’s wills.
All you can do is create conditions of legitimacy, fairness, and consistency. If these conditions exist, compliance emerges; if they do not exist, non-compliance appears.
Therefore, the function of the State is not to administer compliance, but to administer the social conditions that make it possible. Compliance is not managed: it is deserved.
A coherent path
Given this reality, there are two options: either remove from the tax administration’s mandate the objective it cannot manage or redesign the institutional framework to close the causal loop.
The second option leads to a model structured in three clearly differentiated functions under the highest economic authority of the State, they are:
- Technological infrastructure of compliance
This function already exists in most contemporary institutions. It is responsible for channeling funds to the State Treasury and receiving, crossing, producing and validating information automatically and neutrally. It operates without sanctioning power or economic interpretation. Its purpose is to provide a public compliance infrastructure, aimed at facilitating the registration of economic activity and reducing administrative frictions.
- Economic evaluation and the exercise of coercion
Also present in the traditional structure of the tax authority, this function analyzes the economic reality underlying the information received, distinguishes between errors and fraud, determines the existence of tax credits, and applies the enforcement and coercive measures provided for by law. Its scope is limited to confirmed discrepancies and is conducted in accordance with due process principles.
- Structural analysis of non-compliance
While the first two functions make it possible to facilitate compliance and correct non-compliance, the third would make it possible to understand it.
The function that is currently absent in most systems is the one that would allow closing the institutional cycle of compliance, its task would be to analyze verified non-compliance using social and economic approaches, produce aggregated and anonymized information about its causes and feed back to the State decision-making bodies to adjust policies, services, and institutional design.
The proposal is not intended to replace political decision-making or question the authority of the State, but to provide it with a capacity that it lacks today: to systematically learn from the phenomenon of non-compliance.
When this is observed only as an individual fault, the system responds with more control; when it is also interpreted as a symptom, it can become a source of knowledge about the functioning of the social pact itself.
Perhaps the greatest value of this reflection lies not in the immediate adoption of a new institutional structure, but in introducing a question that the tax system rarely asks:
What does non-compliance tell us about the state under which it takes place…?
To the extent that this question finds space in the design of institutions, compliance will cease to be solely a matter of coercion and will begin to form part of the learning of the State itself.
Behavioral analysis is usually presented as a tool to improve administrative efficiency and facilitate the relationship with the taxpayer, but it is rarely proposed as an institutional mechanism aimed at critically evaluating the functioning of the State itself.
The OECD approach
OECD maintains that small changes in the behavior of taxpayers can produce significant increases in collection, so understanding behavior is crucial to improve tax administration.
The OECD also argues that tax compliance largely depends on human behavior and not only on legal incentives or sanctions. That is why he proposes to use behavioral analysis to understand how people really make decisions in the face of their tax obligations.
This approach integrates knowledge from psychology, behavioral economics and behavioral sciences and seeks to understand factors such as:
- perception of fairness of the system
- trust in institutions
- influence of social norms
- design of the State messages
- administrative or cognitive frictions.
Among the main OECD recommendations are:
- To understand the behavior of the taxpayer, through the study of how taxpayers make decisions and what psychological or social factors influence their compliance.
- Design evidence-based policies, using experiments, controlled trials, and data analysis to assess which interventions work best.
- Redesign communications and services, the interventions seek to reduce friction and facilitate voluntary compliance.
- Integrating behavioral analysis into the compliance strategy should not be an isolated project, but part of the tax administration’s compliance management system.
The approach seems to influence the behavior of the taxpayer, rather than using non-compliance as a signal to redesign the functioning of the state.
Distances with the OECD approach
The proposal of this blog does not ask: How do we get the taxpayer to comply? Instead, I ask: What is non-compliance telling us about the functioning of the state?
The change is profound because it turns non-compliance into:
- • institutional signal,
- • indicator of the social pact,
- • source of learning from the State.
Although the OECD recognizes that non-compliance can originate in institutional failures or in the design of the system and proposes to use behavioral analysis to improve the quality of public policies and services, this recognition remains at an instrumental level.
The approach does not go as far as configuring behavioral analysis as a systematic mechanism for evaluating the State, but as a tool to optimize compliance.
The reflection of this blog shares this diagnosis and proposes to move one step further: to use the analysis of non-compliance not only to perfect administrative management, but also to feed back the institutional design of the State itself.
The proposed model places the tax behavior as an indicator of the equilibrium of the social pact, shifting the axis from the correction of behaviors towards the understanding of their structural causes.
The OECD recognizes the failures of the State; the proposed approach makes them the center of the analysis.
Author’s note
This text arises from a series of conversations with artificial intelligence. Not as a technical tool to process data, but as an analytical interlocutor to sort ideas, stress concepts and explore institutional coherence.
In these pages, AI does not replace human judgment or formulate doctrine. It acts as a structural support for reasoning, helping to debug arguments and examine their implications. The content, convictions and responsibility for the statements belong to the author.
If something distinguishes this work, it is precisely that dialogue: a human consciousness questioning the design of the State, assisted by a tool capable of amplifying reflection, but not replacing it.
Artificial intelligence brings analytical power; the sense is still human.
Reference:
OECD, FORUM ON TAX ADMINISTRATION Behavioural Insights for Better Tax Administration- A BRIEF GUIDE. 1 SEPTEMBER 2021
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