Behavioral Interventions in Tax Compliance : Evidence from Guatemala

This paper presents results from a large (43,387) nationwide randomized controlled trial in Guatemala that used reminders to promote tax compliance. The trial varied the letter received by taxpayers (individuals and firms) who had failed to pay the...

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Main Authors:	Kettle, Stewart, Hernandez, Marco, Ruda, Simon, Sanders, Michael
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	LIABILITY CHECKS ACCOUNTING PROPERTY TAX ADDED TAX PUBLIC ECONOMICS INTEREST INCOME GOVERNMENT SPENDING GOVERNMENT REVENUES EXCHANGE OPTION DEVELOPING COUNTRIES TAX COLLECTION TAXPAYER COMPLIANCE REVENUES WORLD DEVELOPMENT INDICATORS TAX COMPLIANCE TAX INCOME TAX TAX LEGISLATION SUSTAINABLE DEVELOPMENT INTERNATIONAL BANK DEVELOPING COUNTRY CREDIBILITY TAXPAYER COMMUNICATIONS SMALL BUSINESS PUBLIC POLICY INFORMAL ECONOMY FINANCES TAX REGIME DEMOCRACY TAX REGULATIONS TAX DEBT MONETARY FUND VALUE ADDED TAX MARKETS DEBT TRUST RETURN PUBLIC FINANCE TAX AUTHORITIES MIDDLE-INCOME COUNTRIES TAX REVENUES GROSS DOMESTIC PRODUCT INVENTORY FINANCE CORPORATE TAX TAX RECEIPTS TAXES FISCAL GOOD TAX RATE PROPERTY TAXES FUTURE INTERNAL REVENUE REPUTATION RETURNS TAX REGIMES GOVERNMENT REVENUE EXPENDITURES MONETARY PAYOFF PROPERTY TAX EVASION TAX AUDIT ACCOUNTANT SHARES DEFAULT TAX LIABILITY MIDDLE-INCOME COUNTRY TAX AVOIDANCE TAX REVENUE ENFORCEMENT GOVERNMENT POLICIES TAXATION TRADE GOODS ACCOUNTING STANDARDS INVESTMENT FISCAL MANAGEMENT POVERTY COMPETITIVE MARKETS TAXPAYERS BUSINESS TAX REVENUE PROFIT TAX POLICY DEDUCTIONS COMMUNICATION TAX REFORM AUDIT EXCHANGE RATE TAX RETURN PROFITS TAX RETURNS DEVELOPMENT BANK TAX STRUCTURE ASSESSMENT HUMAN DEVELOPMENT PUBLIC GOODS
Online Access:	http://documents.worldbank.org/curated/en/2016/06/26422771/behavioral-interventions-tax-compliance-evidence-guatemala http://hdl.handle.net/10986/24530

id	okr-10986-24530
recordtype	oai_dc
spelling	okr-10986-245302021-04-23T14:04:22Z Behavioral Interventions in Tax Compliance : Evidence from Guatemala Kettle, Stewart Hernandez, Marco Ruda, Simon Sanders, Michael LIABILITY CHECKS ACCOUNTING PROPERTY TAX ADDED TAX PUBLIC ECONOMICS INTEREST INCOME GOVERNMENT SPENDING GOVERNMENT REVENUES EXCHANGE OPTION DEVELOPING COUNTRIES TAX COLLECTION TAXPAYER COMPLIANCE REVENUES WORLD DEVELOPMENT INDICATORS TAX COMPLIANCE TAX INCOME TAX TAX LEGISLATION SUSTAINABLE DEVELOPMENT INTERNATIONAL BANK DEVELOPING COUNTRY CREDIBILITY TAXPAYER COMMUNICATIONS SMALL BUSINESS PUBLIC POLICY INFORMAL ECONOMY FINANCES TAX REGIME DEMOCRACY TAX REGULATIONS TAX DEBT MONETARY FUND VALUE ADDED TAX MARKETS DEBT TRUST RETURN PUBLIC FINANCE TAX AUTHORITIES MIDDLE-INCOME COUNTRIES TAX REVENUES GROSS DOMESTIC PRODUCT INVENTORY FINANCE CORPORATE TAX TAX RECEIPTS TAXES FISCAL GOOD TAX RATE PROPERTY TAXES FUTURE INTERNAL REVENUE REPUTATION RETURNS TAX REGIMES GOVERNMENT REVENUE EXPENDITURES MONETARY PAYOFF PROPERTY TAX EVASION TAX AUDIT ACCOUNTANT SHARES DEFAULT TAX LIABILITY MIDDLE-INCOME COUNTRY TAX AVOIDANCE TAX REVENUE ENFORCEMENT GOVERNMENT POLICIES TAXATION TRADE GOODS ACCOUNTING STANDARDS INVESTMENT FISCAL MANAGEMENT POVERTY COMPETITIVE MARKETS TAXPAYERS BUSINESS TAX REVENUE PROFIT TAX POLICY DEDUCTIONS COMMUNICATION TAX REFORM AUDIT EXCHANGE RATE TAX RETURN PROFITS TAX RETURNS DEVELOPMENT BANK TAX STRUCTURE ASSESSMENT HUMAN DEVELOPMENT PUBLIC GOODS This paper presents results from a large (43,387) nationwide randomized controlled trial in Guatemala that used reminders to promote tax compliance. The trial varied the letter received by taxpayers (individuals and firms) who had failed to pay their income tax for the 2013 tax year. Taxpayers were randomly allocated to receive either no letter, the letter originally used by the Guatemalan Tax Authority, or four letter variants adapted using behavioral design. The study finds that although all letters increased the rate of declaration, only two of the letters were successful at increasing the rate of payment and the average amount paid per letter received. The best performing treatments were a deterrent message framing non-declaration as an intentional and deliberate choice, rather than oversight (designed to overcome status quo bias), and a social norms message that referred to the 64.5 percent of taxpayers that had already paid this tax (join the status quo). These two interventions increased the rate of payment as well as the average amount paid conditional on paying, overall more than tripling tax receipts. The paper estimates that if sent to all taxpayers in the sample, in 11 weeks the social norms letter would have generated additional tax revenues of approximately US$760,000, which is 36 times the cost of sending the letters. The effects are persistent and remain at 12 month follow up, suggesting the letters are effective in increasing revenue for the tax authority rather than just bringing tax receipts forward. 2016-06-14T20:24:24Z 2016-06-14T20:24:24Z 2016-06 Working Paper http://documents.worldbank.org/curated/en/2016/06/26422771/behavioral-interventions-tax-compliance-evidence-guatemala http://hdl.handle.net/10986/24530 English en_US Policy Research Working Paper;No. 7690 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Guatemala
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	LIABILITY CHECKS ACCOUNTING PROPERTY TAX ADDED TAX PUBLIC ECONOMICS INTEREST INCOME GOVERNMENT SPENDING GOVERNMENT REVENUES EXCHANGE OPTION DEVELOPING COUNTRIES TAX COLLECTION TAXPAYER COMPLIANCE REVENUES WORLD DEVELOPMENT INDICATORS TAX COMPLIANCE TAX INCOME TAX TAX LEGISLATION SUSTAINABLE DEVELOPMENT INTERNATIONAL BANK DEVELOPING COUNTRY CREDIBILITY TAXPAYER COMMUNICATIONS SMALL BUSINESS PUBLIC POLICY INFORMAL ECONOMY FINANCES TAX REGIME DEMOCRACY TAX REGULATIONS TAX DEBT MONETARY FUND VALUE ADDED TAX MARKETS DEBT TRUST RETURN PUBLIC FINANCE TAX AUTHORITIES MIDDLE-INCOME COUNTRIES TAX REVENUES GROSS DOMESTIC PRODUCT INVENTORY FINANCE CORPORATE TAX TAX RECEIPTS TAXES FISCAL GOOD TAX RATE PROPERTY TAXES FUTURE INTERNAL REVENUE REPUTATION RETURNS TAX REGIMES GOVERNMENT REVENUE EXPENDITURES MONETARY PAYOFF PROPERTY TAX EVASION TAX AUDIT ACCOUNTANT SHARES DEFAULT TAX LIABILITY MIDDLE-INCOME COUNTRY TAX AVOIDANCE TAX REVENUE ENFORCEMENT GOVERNMENT POLICIES TAXATION TRADE GOODS ACCOUNTING STANDARDS INVESTMENT FISCAL MANAGEMENT POVERTY COMPETITIVE MARKETS TAXPAYERS BUSINESS TAX REVENUE PROFIT TAX POLICY DEDUCTIONS COMMUNICATION TAX REFORM AUDIT EXCHANGE RATE TAX RETURN PROFITS TAX RETURNS DEVELOPMENT BANK TAX STRUCTURE ASSESSMENT HUMAN DEVELOPMENT PUBLIC GOODS
spellingShingle	LIABILITY CHECKS ACCOUNTING PROPERTY TAX ADDED TAX PUBLIC ECONOMICS INTEREST INCOME GOVERNMENT SPENDING GOVERNMENT REVENUES EXCHANGE OPTION DEVELOPING COUNTRIES TAX COLLECTION TAXPAYER COMPLIANCE REVENUES WORLD DEVELOPMENT INDICATORS TAX COMPLIANCE TAX INCOME TAX TAX LEGISLATION SUSTAINABLE DEVELOPMENT INTERNATIONAL BANK DEVELOPING COUNTRY CREDIBILITY TAXPAYER COMMUNICATIONS SMALL BUSINESS PUBLIC POLICY INFORMAL ECONOMY FINANCES TAX REGIME DEMOCRACY TAX REGULATIONS TAX DEBT MONETARY FUND VALUE ADDED TAX MARKETS DEBT TRUST RETURN PUBLIC FINANCE TAX AUTHORITIES MIDDLE-INCOME COUNTRIES TAX REVENUES GROSS DOMESTIC PRODUCT INVENTORY FINANCE CORPORATE TAX TAX RECEIPTS TAXES FISCAL GOOD TAX RATE PROPERTY TAXES FUTURE INTERNAL REVENUE REPUTATION RETURNS TAX REGIMES GOVERNMENT REVENUE EXPENDITURES MONETARY PAYOFF PROPERTY TAX EVASION TAX AUDIT ACCOUNTANT SHARES DEFAULT TAX LIABILITY MIDDLE-INCOME COUNTRY TAX AVOIDANCE TAX REVENUE ENFORCEMENT GOVERNMENT POLICIES TAXATION TRADE GOODS ACCOUNTING STANDARDS INVESTMENT FISCAL MANAGEMENT POVERTY COMPETITIVE MARKETS TAXPAYERS BUSINESS TAX REVENUE PROFIT TAX POLICY DEDUCTIONS COMMUNICATION TAX REFORM AUDIT EXCHANGE RATE TAX RETURN PROFITS TAX RETURNS DEVELOPMENT BANK TAX STRUCTURE ASSESSMENT HUMAN DEVELOPMENT PUBLIC GOODS Kettle, Stewart Hernandez, Marco Ruda, Simon Sanders, Michael Behavioral Interventions in Tax Compliance : Evidence from Guatemala
geographic_facet	Latin America & Caribbean Guatemala
relation	Policy Research Working Paper;No. 7690
description	This paper presents results from a large (43,387) nationwide randomized controlled trial in Guatemala that used reminders to promote tax compliance. The trial varied the letter received by taxpayers (individuals and firms) who had failed to pay their income tax for the 2013 tax year. Taxpayers were randomly allocated to receive either no letter, the letter originally used by the Guatemalan Tax Authority, or four letter variants adapted using behavioral design. The study finds that although all letters increased the rate of declaration, only two of the letters were successful at increasing the rate of payment and the average amount paid per letter received. The best performing treatments were a deterrent message framing non-declaration as an intentional and deliberate choice, rather than oversight (designed to overcome status quo bias), and a social norms message that referred to the 64.5 percent of taxpayers that had already paid this tax (join the status quo). These two interventions increased the rate of payment as well as the average amount paid conditional on paying, overall more than tripling tax receipts. The paper estimates that if sent to all taxpayers in the sample, in 11 weeks the social norms letter would have generated additional tax revenues of approximately US$760,000, which is 36 times the cost of sending the letters. The effects are persistent and remain at 12 month follow up, suggesting the letters are effective in increasing revenue for the tax authority rather than just bringing tax receipts forward.
format	Working Paper
author	Kettle, Stewart Hernandez, Marco Ruda, Simon Sanders, Michael
author_facet	Kettle, Stewart Hernandez, Marco Ruda, Simon Sanders, Michael
author_sort	Kettle, Stewart
title	Behavioral Interventions in Tax Compliance : Evidence from Guatemala
title_short	Behavioral Interventions in Tax Compliance : Evidence from Guatemala
title_full	Behavioral Interventions in Tax Compliance : Evidence from Guatemala
title_fullStr	Behavioral Interventions in Tax Compliance : Evidence from Guatemala
title_full_unstemmed	Behavioral Interventions in Tax Compliance : Evidence from Guatemala
title_sort	behavioral interventions in tax compliance : evidence from guatemala
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/06/26422771/behavioral-interventions-tax-compliance-evidence-guatemala http://hdl.handle.net/10986/24530
_version_	1764456963053191168

Behavioral Interventions in Tax Compliance : Evidence from Guatemala

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