Ad can't mask high taxes
If your company had a lousy product, would you want the world to know about it? That's the position Revenue Quebec finds itself in. Its latest ad, aimed at putting a stop to the underground economy, is pretty effective in getting the message out. But it also demonstrates advertising's limitations in changing buyer behavior.
The ad depicts a businessman talking about how good he is at managing his money, casually mentioning that he sometimes pays cash for items without asking for a bill. Everything is fine - except that he is wearing a ski mask.
The spot, designed by the Montreal office of ad agency Marketel, is effective because it contrasts the businessman's guy-next-door demeanor with a ski-mask - a universally recognized symbol of crime. The English ad concludes with a statement that the underground economy is "wrong," the French ad claims it is "du vol," (theft).
But whether the ad campaign will succeed in reducing the underground economy is another question altogether. The reason goes back to one of advertising's most fundamental limitations. Advertising is pretty good at stimulating latent demand for a product or service. It is almost useless in getting people to do, or buy, something that they don't want.
You can understand why people are skeptical about accepting this. Every time some new product or fad comes up out of nowhere, the advertising and publicity accompanying it are often the only visible indication as to why they achieve success. But long-term marketing success almost always occurs because solid demand existed, which advertising only served to stimulate.
In the anti-underground campaign, Revenue Quebec is trying to sell Quebecers on the idea of paying taxes. It's not such a bad idea, most people want to pay their fair share, and feel like they are contributing to society's overall benefit.
The problem is that at the same time many Quebecers feel overtaxed. The province's taxes are among the highest on the planet, so high in fact that many businesses and individuals see nothing wrong with conducting business under the table, by either not declaring income, or by paying cash for certain products.
This is especially true at the margins where most tax dodging takes place. Paying under-the-table is done mostly by otherwise honest guy-next-door types just like the one in the ad, who want to save the 15 per cent sales taxes as well as the additional five to 10 per cent discount vendors often give for cash payments. It's very hard to convince someone who can save 25 per cent by paying cash not to do so. On "sin" products such as alcohol, gasoline and tobacco, taxes are much higher and often exceed 50 per cent of the retail price.
The tax picture on the production side is just as bad. Quebecers face marginal tax rates in excess of 50 per cent, which kick in at fairly low levels of income. Take the average construction worker, if he works an hour of overtime, close to half of what he earns goes to the government.
If he takes what he earns in that hour, and then goes out and buys a carton of Player's Light, the net result is that he is taxed 50 per cent on his overtime salary, and then again 50 per cent in cigarette taxes. This puts Joe Blow construction worker in the 75 per cent marginal tax bracket. At that rate it is Quebec government officials that ought to be on television wearing ski masks.
If our construction worker gets to choose between earning some extra cash renovating his neighbor's deck, or working above board for his full-time employer he won't have to think long. No television commercial on earth is going to make Joe Blow work against his own financial interest.
In fact the problem with much of the advertising that is going on today is that CEO's tell their marketing departments to "go out and sell the product," without showing appropriate concern for whether those products are what consumers really want.
As long as people see nothing wrong with dealing in the underground economy to duck taxes, advertising, no matter how well designed is unlikely to make them change their minds. In fact, by effectively publicizing this fact, it may actually make the problem worse.
Photo caption: In Revenue Quebec's latest campaign against the underground economy a businessman wears a ski mask while talking about how he dodges taxes.
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