Oxford Dictionaries’ word of the year 2016 was ‘post-truth’: “circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion”. Along with President Trump’s adviser Kellyanne Conway’s coining of the term ‘alternative facts’, this has undermined the reliability of any previously authoritative commentator, eroding the public’s near unshakable respect for those institutions and professionals appointed as guardians of truth and integrity.
But has all this had any effect on the perceived trustworthiness of the kind of ‘experts’ that were also vilified by those with vested interest in the wake of Brexit? In a post-truth world, what’s the role for those ‘trusted advisers’ that are so dependent for credibility on providing opinions based on objective facts?
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Fake news, half-truths and invented facts manipulate public opinion, feeding off grievances and a growing distrust of the establishment. The media is now distrusted in more than 80% of the 33 countries surveyed in this year’s Trust Barometer by communications firm Edelman. It is now viewed as part of the elite, politicised and unable to meet its impartial reporting obligations because of economic pressure.
The Barometer shows that the trust issue infects all sectors and people are losing faith not just in the media, governments and NGOs, but also in business. In November 2016, shares in French construction giant Vinci fell more than 18 percent after a fake press release claiming it would sack its chief finance officer and restate its accounts. The hoax claim was published by Bloomberg and picked up by other mainstream media and makes clear that no business is immune to this kind of challenge.
Simply relying on the mainstream media and social channels to tell your true story, or correct inaccuracy, is not enough. As Praxity firms know very well, fostering direct, quality engagement with customers and stakeholders has never been more important – a key topic for discussion at October’s Global Tax Conference in San Francisco.
Yet the Barometer also shows that among those who are uncertain about whether the current ‘system’ is working for them, people trust business the most. Edelman’s Kathryn Beiser says: “Business is the last retaining wall for trust, but its leaders must step up on the issues that matter for society”.
So, who exactly CAN you trust?
Tax is a bit of an issue. The finances of several politicians came under scrutiny following the leak of the ‘Panama Papers’, and led to the resignation of the Icelandic prime minister, and criticism of then UK prime minister, David Cameron, for shares he once held in an offshore fund.
US president Barack Obama called for international tax law reforms based on the “principle of making sure everyone pays their fair share” and it’s clear from behavioural economics and economic psychology that people care a lot about fairness and not just their own financial self-interest. The public wants a fair tax system where everyone pays what they owe. But there are many different types of fairness involved in tax, often conflicting. Preferences can even depend on whether taxes are presented as amounts or percentages, bonuses or penalties.
The G20 Public Trust in Tax report, from ACCA, IFAC and CA ANZ, was the first ever in-depth study of views about who is trusted on international taxation. It makes interesting reading. It’s reassuring for accountants, but it doesn’t gloss the scale of the challenge for the future, nothing less than “a reset – to win back the public’s trust, and create a more effective international tax system fit for the twenty-first century”.
The results show people want governments to cooperate for a more coherent international tax system. They trust professionals, but have developed a deep distrust of politicians when it comes to tax.
• 57% trust or highly trust professional accountants when it comes to tax, compared to professional tax lawyers (49%) and NGOs (35%).
• 58% believe accountants contribute to more efficient tax systems, 56% more effective tax systems, 49% more fair tax systems.
• People in G20 countries have become deeply distrustful of politicians when it comes to the tax system – 67% distrust/highly distrust politicians.
• The public trust deficit extends to media (41% distrust or highly distrust), and business leaders (38%).
• People want governments to put cooperation ahead of competition – 73% think it important for governments to cooperate on tax policy to create a more coherent international tax system and people are 3.5x more likely to favour cooperation over competition.
• 73% consider taxes as mainly a matter of laws and regulation, and twice as likely than morals and fairness.
• Diverse views on tax minimization, although 15% more people overall view it as appropriate or for high income earners and local and multinational companies than for average or low income earners.
Does it really matter?
Professor Zahir Irani, dean of the University of Bradford’s School of Management, thinks the post-truth landscape is an opportunity for organisations to position themselves as responsible institutions with high standards of respect for truth, unbiased thinking and genuine expertise. “Brexit and Trump have challenged the need for experts and, in some respect, reset what defines expertise. Businesses need to be clear about the nature of their expertise – how experts get ethical training, and how they have an awareness of their responsibilities that impact the society.”
Accountants can help but “the profession could do with new thinking about how to respond to client needs in this new world”, says Henry Irving, head of ICAEW’s Audit and Assurance Faculty. “A strong, engaged, local presence in communities will help them promote the right business thinking and values.”
In the face of the popular backlash against experts, accounting needs to reinforce the view that professional expertise and scepticism are vital for trust. “We need to offer a USP in this sensitive space: accountants generally, and the globally-branded firms in particular, are perceived by many as the self-serving establishment and therefore do not have populist credentials,” says Irving.
You can expect further coverage of these issues in future Praxity communications. If you would like to share your views or contribute to discussions, please contact our copywriter Simon Tyrrell on email@example.com.