Tax literacy – tax education for students

Duration 2015–2018

Institute Institute for Business Education

Department Department of Management

Bettina Fuhrmann, Richard Fortmüller, Rosanna Steininger

According to the European Commission, EU member states suffer an annual loss of approximately one trillion euros through tax avoidance and evasion. Along with the current tax laws and legal consequences, targeting tax literacy is another way to counteract tax avoidance and evasion. Promoting tax literacy is particularly relevant among students of business-oriented secondary schools, as they will be confronted with possible opportunities for tax evasion in their future roles as entrepreneurs and business leaders. Usually, secondary school students in the fourth year of a business college already have some experience with taxes (e.g. through shopping, but also through work). It is important that they understand the taxation system, the need for taxes, and have a considered attitude towards tax compliance.

Tax knowledge has a positive influence on business college students’ attitudes towards tax compliance.

The research project had a number of objectives. One was to develop a tax knowledge model (for all citizens), another to assess fourth-year business college students’ level of tax literacy to derive input for instruction and curriculum development. Additionally, the project analyzed the relationship between tax knowledge and the attitudes toward tax compliance, i.e. whether more knowledgeable students had a more positive attitude towards taxes than less knowledgeable students. Qualitative interviews were conducted with students on their conceptions and misconceptions regarding the tax system and paying taxes, which served as a basis for quantitative surveys at business colleges in Vienna, Lower Austria, and Burgenland. Based on responses from 688 students, the study showed that students have a basic understanding of taxes, public goods, and the role of the state in taxation. It also revealed some misconceptions held by students (e.g. perception of tax burden), which might have an influence on their attitudes towards taxation. The analysis also confirmed that more knowledgeable students show a more positive attitude towards tax compliance. Based on these results, a teaching concept was developed in cooperation with Rosanna Steininger. This concept is designed to promote an understanding of the importance of tax compliance in order to reduce tax evasion.

The teaching concept developed is used in classes at business colleges and promotes tax literacy and tax compliance among students.

The research findings on students’ attitudes towards tax compliance represent an important basis for future instruction at business colleges. They help business college instructors recognize students’ misconceptions and knowledge gaps and address them effectively. The results were presented at the two most important conferences on current research findings and teaching practice in the business education field in Austria. These presentations targeted instructors in particular by highlighting students’ general level of tax literacy and offering a concept for promoting better tax literacy and tax compliance. A textbook publisher made the teaching concept and the associated teaching materials available for download online free of charge. A final report encompassing the findings was sent to all participating colleges and school authorities, addressed to both the college heads and instructors who will use the research findings, teaching concept, and materials provided. Additionally, the teaching concept is presented as a good practice example in the WU Master’s Program in Business Education, showing the future teachers how tax knowledge can be conveyed in business classes through a classroom experiment. The research findings and adoption of the teaching concept contribute to achieving SDG 4 “Quality Education” and SDG 17 “Partnerships for the Goals.”

Assessment of tax literacy among business college students

Teaching concept to promote tax compliance

Adoption of the teaching concept by business colleges and promotion of tax literacy of students