At a time when the media is reporting different outcomes in the justice system depending on the job, family or position in society of the convicted individual, it becomes time to question the transparency of the outcomes in the justice system. If the penalty for a crime was determined solely on factors that are legally permitted to be considered in determining the appropriate punishment – then why the outcry? If the penalty can be defended – why isn’t it? Perhaps it is time for judges to be given the opportunity to explain their decisions and the factors that contribute to the outcomes under question.
My research suggests different outcomes in the justice system for different “types” of people – and by “types” I mean people receiving welfare benefits and other financial offenders (Marriott, 2016a). Welfare beneficiaries are more likely to be investigated than (for example) tax evaders and they are also more likely to be prosecuted than tax evaders for an equivalent level of offending. These two crimes – and they are both crimes – are conceptually identical: they are both deliberate financial offending; they have the same victim; and they result in the same outcome: less resources for the government. Perhaps the key difference is in the economic significance of the two crimes. Typically, welfare fraud is around $30 million per annum, whereas detected tax evasion is usually around $1 billion. Undetected (and therefore uncollected) tax evasion is forecast to be at least $5 billion per annum. To put this into context – that is more than the Ministry of Social Development annual budget for working-age benefit payments.
Differences are also visible in sentencing outcomes. For average offending of $229,000 of tax evasion – 18% of people receive a prison sentence. For average offending of $76,000 of welfare fraud – 67% of people receive a prison sentence. This is despite the fact that very little of the tax evasion is repaid, while the majority of the welfare fraud will be collected over time. There is no obvious explanation for this outcome. There are no mitigating or aggravating factors in the Sentencing Act 2002 that would indicate that a crime of poverty is more serious than a crime of greed.
Differences exist for how we treat people receiving welfare even when there is no suggestion of crime. When people have legitimately generated welfare debts, these are more likely to be collected than unpaid tax. The Ministry of Social Development spend more to collect $100 of welfare debt than Inland Revenue do to collect $100 of unpaid tax. Moreover, we treat delinquent taxpayers and those with welfare debts differently when serious hardship is encountered: tax debts are more likely to be written off while welfare debtors are more likely to have their repayment rates renegotiated.
Is this what society wants? Do we genuinely believe that welfare fraud is significantly more serious than tax evasion? Do we consider a welfare debt to be more worthy of collection than a tax debt? My research suggests we don’t. Indeed, the majority of people see no difference in welfare fraud and tax evasion (Marriott, 2016b).
Notwithstanding the lack of evidence to suggest these outcomes reflect the preferences of society, recent changes to the Social Security Act 1964 extend even more punitive treatment to those on, or associated with, welfare benefits. In 2014, the Social Security Act 1964 was amended to allow the partners of people who were convicted of welfare fraud to be both prosecuted for the crime and jointly liable for the debt generated from the crime. Putting aside all ethical or social issues with such extension of criminal liability, if this is acceptable for welfare fraud, why is it not also acceptable for other financial crimes such as tax evasion? If partners are deemed to have known that they were benefiting from offending, then there is no case to be made for why the partners of those engaging in welfare fraud would be more aware of the crime than the partners of other financial offenders.
It all comes back to treating people equally. If we want to live in a fair society where people are treated equally, we need our justice system to deliver fair, transparent sentences to equivalent crimes.
Lisa Marriott is an Associate Professor in the School of Accounting and Commercial Law, Victoria University of Wellington.
Marriott L (2016a) ‘The Construction of Crime: The Presumption of Blue-Collar Guilt and White-Collar Innocence’, Social Policy and Society. First published online, doi: 10.1017/S1474746416000063.
Marriott L (2016b) ‘An Investigation of Attitudes to Tax Evasion and Welfare Fraud in New Zealand’, Australian and New Zealand Journal of Criminology. First published online, doi: 10.1177/0004865815596793.Share This: