Shaming for Tax Enforcement: Evidence from a New Policy

55 Pages Posted: 24 Sep 2018 Last revised: 16 Dec 2019

See all articles by Nadja Dwenger

Nadja Dwenger

Max Planck Institute for Tax Law and Public Finance

Lukas Treber

University of Hohenheim

Date Written: September 2018

Abstract

Many tax authorities make ample use of public shaming, mainly to enforce tax payments. However, our understanding of the policy is very limited. It is unclear whether public shaming affects corporations, which account for the bulk of unpaid taxes, and whether previously compliant taxpayers are adversely affected. This paper makes progress on these questions by exploiting comprehensive administrative tax data and the introduction of a novel naming-and-shaming policy in Slovenia in 2012 as a natural experiment. The policy affected both individuals and corporations. It was announced four months before its implementation, which allows us to separate responses to the threat of shaming from responses to actual shaming. We show that corporations reduce their tax debt by 8.5% in response to the threat of shaming, particularly in industries where reputational concerns are likely to be important. Individuals reduce their tax debt by 5%. The publication of the first naming-and-shaming list further reduces tax debt among shamed taxpayers. This effect, however, is marginal in terms of revenue and tapers off quickly. Previously compliant taxpayers remain compliant throughout.

Keywords: compliance, enforcement, penalty, shaming, social image concerns, tax debt

JEL Classification: D1, H26, K34, K42, Z13

Suggested Citation

Dwenger, Nadja and Treber, Lukas, Shaming for Tax Enforcement: Evidence from a New Policy (September 2018). CEPR Discussion Paper No. DP13194, Available at SSRN: https://ssrn.com/abstract=3254229

Nadja Dwenger (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

10117
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/public_economics/public_economics_people/dwenger_nadja.cfm

Lukas Treber

University of Hohenheim ( email )

Fruwirthstr. 48
Stuttgart, 70599
Germany

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