Consumer Behaviour Paper

Executive Summary

To: Executives at the Canadian Revenue Agency

From:

Subject:

Date: April 1st, 2015

Problem

Canadians of all ages and income classes are having a difficult time filing their taxes on time. How can we use nudging to help the CRA increase both the total amount of people filing their taxes as well as the amount on people filing their taxes on time?

Analysis

- The CRA can use the Nudging theory to help promote families and individuals to complete their taxes on time.

- Nudge theory focuses on small changes that do not inhibit the population’s choice nor does it alter their financial power. Instead nudge theory attempts to motivate individuals to complete a desired behaviour.

- Most Canadian students and low income individuals are not comfortable with the tax system due to a huge lack of information. Canadian students often have their parent’s file their taxes and the students that file their taxes themselves often file them late and have mistakes.

- The tax filling process is extremely time consuming

- The middle and high class often lack motivation to file their taxes out of fear that they will need to pay.

Recommendation

Our recommendation is to use nudging to help increase the total amount of information given to students as well as low, mid and high-income individuals and families. The CRA should look at simplifying the tax system using pre- existing government information, as well look at providing incentives for people who complete their taxes on time. The CRA can use media to inform people of the steps involved in taxes.

Introduction

The Canadian Revenue agency is an organization that pulls in billions of dollars a year. Most of this money stems from government tax programs such as income taxes. The goal of income tax is to get everyone to fill out their tax forms at the same time, allowing the government to payout money that they owe individuals, while still pulling in a large amount of revenue. If the...