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How to improve tax compliance? Evidence from population-wide experiments in Belgium

De Neve, Jan-Emmanuel, Imbert, Clement, Spinnewijn, Johannes, Tsankova, Teodora and Luts, Maarten (2019) How to improve tax compliance? Evidence from population-wide experiments in Belgium. CEP Discussion Papers (1621). Centre for Economic Performance, LSE, London, UK.

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Abstract

We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran _ve experiments spanning the tax process which varied the communication of the tax administration with all income taxpayers in Belgium. A consistent picture emerges across experiments: (i) simplifying communication increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective. Even tax morale messages that improve knowledge and appreciation of public services do not raise compliance. In fact, heterogeneity analysis with causal forests shows that tax morale treatments backfire for most taxpayers. In contrast, simplification has large positive effects on compliance, which diminish over time due to follow-up enforcement. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. Simplification is far more cost-effective, allowing for substantial savings on enforcement costs, and also improves compliance in the next tax cycle.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2019 The Authors
Divisions: Centre for Economic Performance
Economics
Subjects: H Social Sciences > HJ Public Finance
H Social Sciences > HB Economic Theory
JEL classification: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments
D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
Date Deposited: 02 Dec 2019 13:00
Last Modified: 07 Dec 2019 01:02
URI: http://eprints.lse.ac.uk/id/eprint/102725

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