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

74 Pages Posted: 22 May 2019

See all articles by Jan‐Emmanuel De Neve

Jan‐Emmanuel De Neve

University of Oxford

Clement Imbert

University of Warwick

Maarten Luts

Belgian Federal Public Service Finance

Johannes Spinnewijn

London School of Economics & Political Science (LSE)

Teodora Tsankova

University of Warwick

Multiple version iconThere are 2 versions of this paper

Date Written: May 2019

Abstract

We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran five 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.

Suggested Citation

De Neve, Jan-Emmanuel and Imbert, Clement and Luts, Maarten and Spinnewijn, Johannes and Tsankova, Teodora, How to Improve Tax Compliance? Evidence from Population-Wide Experiments in Belgium (May 2019). CEPR Discussion Paper No. DP13733. Available at SSRN: https://ssrn.com/abstract=3391080

Jan-Emmanuel De Neve (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Clement Imbert

University of Warwick ( email )

Maarten Luts

Belgian Federal Public Service Finance ( email )

Belgium

Johannes Spinnewijn

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
00 44 (0) 20 7955 7022 (Phone)

HOME PAGE: http://econ.lse.ac.uk/staff/spinnewijn_johannes/

Teodora Tsankova

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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