Improving Tax Compliance Without Increasing Revenue: Evidence From Population-Wide Randomized Controlled Trials in Papua New Guinea

45 Pages Posted: 15 Jul 2020

See all articles by Christopher Hoy

Christopher Hoy

World Bank

Luke McKenzie

Australian National University (ANU) - Crawford School of Public Policy

Mathias Sinning

Australian National University (ANU) - Crawford School of Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: June 19, 2020

Abstract

This paper studies the impact of “nudges” on taxpayers with varying tax compliance histories in Papua New Guinea. We present the results from two population-wide randomized controlled trials in a setting that is characterized by low compliance rates and a lack of effective enforcement. We test the impact of text messages, flyers and emails that remind taxpayers of declaration due dates and provide information about the public benefits from paying tax. We find that the treatments increased the number of tax declarations filed without increasing the amount of tax paid because the taxpayers who responded to the nudges were largely exempt from paying tax. This result is consistent across tax types, communication channels and time periods. We also find that the treatments had no impact on previously non-filing taxpayers. Collectively, our results indicate that taxpayers who face the lowest cost from complying are most likely to respond to a nudge.

Keywords: Tax Compliance, Field Experiments

JEL Classification: C93, D91, H2, H20, O1, O17

Suggested Citation

Hoy, Christopher and McKenzie, Luke and Sinning, Mathias, Improving Tax Compliance Without Increasing Revenue: Evidence From Population-Wide Randomized Controlled Trials in Papua New Guinea (June 19, 2020). Tax and Transfer Policy Institute, working paper 7/2020, Available at SSRN: https://ssrn.com/abstract=3632684 or http://dx.doi.org/10.2139/ssrn.3632684

Christopher Hoy (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Luke McKenzie

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

Mathias Sinning

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://www.mathiassinning.com

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