“It is already known in psychology that for example drug squad officers use unconscious learning processes to collect experience-based knowledge of how to identify suspects who then turn out, after checks, to be drug smugglers,” said Enrico Schöbel, from the Institute for Public Finance and Management at Leipzig University.
“A similar experience-based process takes place with finance administrators dealing with individual cases,” he said in a statement.
Schöbel has just published research suggesting that tax inspectors have this kind of sixth sense, in the German language journal Perspectives of Economic Policies.
“Just as police officers mostly cannot describe how they can tell who a drug dealer is, tax inspectors generally cannot explain how what makes a typical tax evader,” he said. But as the bureaucrats work through a person’s tax declaration, he said, they unconsciously use their experience to form an opinion on whether there might be something suspect.
“The challenge is to chose those tax declarations which should be more intensively checked – because without a closer look the person might end up paying too low a tax rate,” said Schöbel.
He worked with tax inspectors across Lower Saxony for the study, to see how much experience-based instinct played a role in their decision-making.
He said there seemed to be a strong correlation between the use of experience-based instinct when deciding which cases to put forward for more intensive checks, and the success rate of catching dishonest declarations and increasing tax bills.