Tax Policy Measures to Combat the SARS-CoV-2 Pandemic and Considerations to Improve Tax Compliance: A Behavioral Perspective

40 Pages Posted: 16 Sep 2020 Last revised: 30 Oct 2020

See all articles by James Alm

James Alm

Tulane University

Kay Blaufus

Leibniz Universität Hannover

Martin Fochmann

Free University of Berlin

Erich Kirchler

University of Vienna - Faculty of Psychology

Peter Mohr

Free University of Berlin (FUB)

Nina E. Olson

Center for Taxpayer Rights

Benno Torgler

Queensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: October 22, 2020

Abstract

Governments have taken remarkable measures during the SARS-CoV-2 pandemic in their efforts to safeguard citizens’ health and the economy. As a consequence, public debts have reached unprecedented levels, which will require at some point higher taxes. Ensuring that citizens pay these taxes requires consideration of the many factors that will likely affect their tax compliance decisions. In this paper, we reflect from a behavioral economic perspective the impact of tax policy measures on the perception, evaluation, and behavior of citizens and derive considerations to devise appropriate tax policies to ensure compliance in the future. We start with speculations about citizens’ views of governmental restrictions and economic stimulus measures in response to the crisis, we apply these speculations to the acceptance and perceived effectiveness of policy measures on citizens’ tax compliance behaviors, and we finish with their likely impact on determinants of tax compliance. Building on the derived insights, we deduce a set of considerations to improve tax compliance – and to generate the necessary tax revenues to deal with the after-effects of SARS-CoV-2 when the pandemic is under control: communication, transparency and justification of measures, access to support, service provision, audits and penalties in case of free-riding, targeted audits, building social norms of cooperation, consideration of framing effects, development of plans and strategies for the future, and anticipation of hindsight biases.

Keywords: Covid-19 crisis, tax compliance, behavioral economics, behavioral taxation

JEL Classification: H12, H20, H26, D91

Suggested Citation

Alm, James and Blaufus, Kay and Fochmann, Martin and Kirchler, Erich and Mohr, Peter and Olson, Nina E. and Torgler, Benno, Tax Policy Measures to Combat the SARS-CoV-2 Pandemic and Considerations to Improve Tax Compliance: A Behavioral Perspective (October 22, 2020). WU International Taxation Research Paper Series No. 2020-10, Available at SSRN: https://ssrn.com/abstract=3692370 or http://dx.doi.org/10.2139/ssrn.3692370

James Alm

Tulane University ( email )

United States
5048628344 (Phone)

Kay Blaufus

Leibniz Universität Hannover ( email )

Institut für Betriebswirtschaftliche Steuerlehre
Koenigsworther Platz 1
Hannover, 30167
Germany

Martin Fochmann

Free University of Berlin ( email )

Thielallee 73
Accounting and Taxation
Berlin, 14195
Germany

Erich Kirchler (Contact Author)

University of Vienna - Faculty of Psychology ( email )

Universitaetsstrasse 7
Vienna, A-1010
Austria
+43 1 42 7747332 (Phone)
+43 1 42 7747339 (Fax)

HOME PAGE: http://homepage.univie.ac.at/erich.kirchler

Peter Mohr

Free University of Berlin (FUB) ( email )

Nina E. Olson

Center for Taxpayer Rights ( email )

Benno Torgler

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

CREMA

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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