Free DP Download 23 May 2019: Getting People to Pay their Tax on Time: Experimental evidence that simple communication is the key

Thursday, May 23, 2019

How to Improve Tax Compliance? Evidence from Population-wide Experiments in Belgium 

Jan-Emmanuel De Neve, Clement Imbert, Maarten Luts, Johannes Spinnewijn and Teodora Tsankova
CEPR DP No. 13733 | 13 May 2019

Simplifying communication by the tax administration consistently improves tax compliance, according to new CEPR research by Jan-Emmanuel De Neve and colleagues. In a series of population-wide experiments in Belgium, they show that simplification encourages taxpayers to pay their taxes on time and makes both late filers and late payers comply more swiftly than they otherwise would.

Their results also demonstrate the effectiveness of deterrence messages. In contrast, invoking tax morale does not raise compliance and even backfires for most taxpayers: it seems that they don't want to be advised to improve their knowledge and appreciation of public services. On the other hand, nudge-type interventions are highly cost-effective compared with traditional tax enforcement measures.

Figure 1: Annual means of pay for NHS staff by job type

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