There is a real difference between lying because of a vivid imagination (yes, my imaginary friend is still in the bathroom, so I can't leave yet) and to get out of trouble (no, I didn't see Billy there; I just decided swing out my arm and accidentally punched him in the nose. It was an accident.)
When my oldest decided that lying was a lovely tool to get to do what she wanted with no consequences, I sat her down (she was probably four) and told her how important it was that people could trust each other. I told her how upsetting it was when I believed what she said and then found out it was a lie. And then I warned her that if she lied to me again to get out of trouble that I would know that she had decided that lying was ok. And if it was ok for her, it would be ok for me, too. And that at some point I would lie to her but she wouldn't know what about.
And then I kept my word. After then next time I caught her lying, I just said, "Ok. Now you'll have to wonder when I'm lying or telling the truth." About two days later, I promised her that in two days, she and I would have a big, fun day of going to McDonald's for a Happy Meal, buying a new toy at the Disney Store, and then a trip to the park. I talked it up a lot. And then on the day we were supposed to go, I very calmly said, "Oh, no. We're just staying home today. I lied."
She, of course, had melt down and drama and anger and all of the emotions that come when we've been lied to. I kept calm and let her be upset. After she finally calmed down, I sat her in my lap and asked if she understood why lying was so awful. She agreed it was bad and promised not to lie.
Of course, she did from time to time - don't we all - but it wasn't really a problem after that. And even in high school after she forged my signature on a paper, she fessed up and told me about it afterwards.
By the way, it was really, really tough for me not to give in and go ahead and take her. And after she agreed not to lie to me, I did promise her another special treat the following day and followed through so that she could experience the reward of someone not lying to her.
