Fiscal Exchange and Tax Compliance: Evidence From a Field Experiment

Abstract

Behavioral interventions appealing to taxpayers' reciprocity often leave tax compliance unaffected. We provide evidence that a "fiscal exchange nudge" increased tax compliance in a setting where one might not expect it: crisis-ridden Argentina. In a randomized controlled trial with over 20,000 taxpayers, a tax bill visually celebrating realized public works benefiting children increased payment rates of tax delinquents by about 20 percent, or almost 40 percent when the bills were delivered in person. Without the appeal, the new bill design generated significantly fewer payments. Changes in the design of the tax bill also increased arrears cancellation. We estimate the ratio of marginal revenues to costs for the fiscal exchange bill to be 18. The factors we associate with the unexpectedly positive impacts are consistent with strengthening an affective response. We find persistent effects of the experiment two years later. The results suggest that communities have more scope to increase tax revenues through non-threatening interventions.

Redesigning tax debt collection process in Brazil: process automation & nudging for tax compliance

“…Tax administration is one of the main fields of nudge experimentation (for Brazil, see Schächtele et al, 2022). Some of the BIT's (2011b) trials with behavioural insights applied to tax collection showed that using social norm messages can lead individuals to pay their tax debts more quickly, and that highlighting key messages and norms can lead to higher response rates.…”