Spillovers and Long-Run Effects of Messages on Tax Compliance: Experimental Evidence from Peru

52 Pages Posted: 28 Dec 2020

See all articles by Juan Francisco Castro

Juan Francisco Castro

Universidad del Pacífico

Daniel Velásquez

Universidad del Pacifico

Arlette Beltran

Universidad del Pacifico, Peru - Department of Economics

Gustavo Yamada

Universidad del Pacifico

Abstract

We carry out a randomized controlled trial to evaluate the effect of three different types of messages sent to taxpayers on their compliance with the rental income tax (direct effect) and the spillovers produced on payments related to the capital gains and the self-employment income taxes. One message highlights detection, another appeals to social norms, and the third type appeals to altruism. This is the first study to evaluate if these messages can produce spillovers across taxes and to perform a long-term follow-up. This is important to determine if the treatment increases tax revenues. We find that the message addressing detection produces a positive and permanent direct effect and a negative but transitory spillover on the other two taxes. Overall, it increases tax revenues by US$3.92 per dollar spent in the long run. The message appealing to social norms has no direct effect but produces a permanent negative spillover on the capital gains tax. Ignoring this spillover would have lead one to conclude that this message is innocuous when in fact produces a loss of US$ 5.20 per dollar spent in the long run. The message appealing to altruism produces a transitory negative effect and no spillovers, and has no effect on tax revenues in the long run.

JEL Classification: D91, K42, H24, H26, H41

Suggested Citation

Castro, Juan Francisco and Velásquez, Daniel and Beltran, Arlette and Yamada, Gustavo, Spillovers and Long-Run Effects of Messages on Tax Compliance: Experimental Evidence from Peru. IZA Discussion Paper No. 13974, Available at SSRN: https://ssrn.com/abstract=3755391

Juan Francisco Castro

Universidad del Pacífico

Av. Salaverry 2020
Jesús María
Lima
Peru

Daniel Velásquez

Universidad del Pacifico

Av. Salaverry 2020
Región Metropolitana
Lima 18, Lima 11
Peru

Arlette Beltran

Universidad del Pacifico, Peru - Department of Economics ( email )

Av. Salaverry 2020
Región Metropolitana
Lima 18, Santiago Lima 11
Peru

Gustavo Yamada (Contact Author)

Universidad del Pacifico

Av. Salaverry 2020
Región Metropolitana
Lima 18, Lima 11
Peru

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