Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic
This paper presents the results of a randomized controlled trial testing the effectiveness of taxpayer communications informed by behavioral science in inducing business payroll tax compliance at the onset of the COVID-19 pandemic. In March 2020, a...
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Washington, DC: World Bank
2022
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| Online Access: | http://documents.worldbank.org/curated/en/256481646672332016/Nudging-in-the-Time-of-the-Coronavirus-Evidence-from-an-Experimental-Tax-Trial-in-Albania-at-the-Onset-of-a-Global-Pandemic http://hdl.handle.net/10986/37114 |
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okr-10986-371142022-03-10T05:10:50Z Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic Karver, Jonathan George Shijaku, Hilda Ungerer, Christoph T F TRADE AND INVESTMENT TAX AUTHORITY RANDOM EFFECTS MODEL RANDOMIZED CONTROLLED TRIALS SOCIAL SECURITY CONTRIBUTION COMPENSATION FROM INJURY GLOBAL PANDEMIC This paper presents the results of a randomized controlled trial testing the effectiveness of taxpayer communications informed by behavioral science in inducing business payroll tax compliance at the onset of the COVID-19 pandemic. In March 2020, an experimental tax trial targeting 5,423 firms was implemented, coinciding with the national lockdown due to the global pandemic. The Albanian tax authority sent postal letters to employers and selected employees highlighting a suspicion that wages were under-declared to avoid personal income tax withholding. Employers and employees suspected of under-declaring were randomly assigned to receive a soft-tone letter (highlighting the social importance of contributing through taxes), a strong-tone letter (highlighting the penalties associated with under-declaring), or none (forming a control group against which the impact of receiving the letters could be estimated). For employers receiving soft-tone letters, the study finds large, statistically significant increases on subsequent payroll declarations (by as much as 10 percent relative to the control group), which gradually attenuate over the following six months. No statistically significant effects are found for letters sent to employees or strong-tone letters. The findings highlight (i) the importance of framing of communications as well as the importance of smart selection of letter recipients for taxpayer communication campaigns, (ii) which type of taxpayer communications were most effective in the context of the COVID-19 pandemic, and (iii) the role that randomized controlled trials and behavioral science can play in strengthening the effectiveness of government policy, particularly for public revenue mobilization. 2022-03-09T20:27:55Z 2022-03-09T20:27:55Z 2022-03-07 Working Paper http://documents.worldbank.org/curated/en/256481646672332016/Nudging-in-the-Time-of-the-Coronavirus-Evidence-from-an-Experimental-Tax-Trial-in-Albania-at-the-Onset-of-a-Global-Pandemic http://hdl.handle.net/10986/37114 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Policy Research Working Paper Publications & Research Europe and Central Asia Albania |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
TRADE AND INVESTMENT TAX AUTHORITY RANDOM EFFECTS MODEL RANDOMIZED CONTROLLED TRIALS SOCIAL SECURITY CONTRIBUTION COMPENSATION FROM INJURY GLOBAL PANDEMIC |
| spellingShingle |
TRADE AND INVESTMENT TAX AUTHORITY RANDOM EFFECTS MODEL RANDOMIZED CONTROLLED TRIALS SOCIAL SECURITY CONTRIBUTION COMPENSATION FROM INJURY GLOBAL PANDEMIC Karver, Jonathan George Shijaku, Hilda Ungerer, Christoph T F Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic |
| geographic_facet |
Europe and Central Asia Albania |
| description |
This paper presents the results of a
randomized controlled trial testing the effectiveness of
taxpayer communications informed by behavioral science in
inducing business payroll tax compliance at the onset of the
COVID-19 pandemic. In March 2020, an experimental tax trial
targeting 5,423 firms was implemented, coinciding with the
national lockdown due to the global pandemic. The Albanian
tax authority sent postal letters to employers and selected
employees highlighting a suspicion that wages were
under-declared to avoid personal income tax withholding.
Employers and employees suspected of under-declaring were
randomly assigned to receive a soft-tone letter
(highlighting the social importance of contributing through
taxes), a strong-tone letter (highlighting the penalties
associated with under-declaring), or none (forming a control
group against which the impact of receiving the letters
could be estimated). For employers receiving soft-tone
letters, the study finds large, statistically significant
increases on subsequent payroll declarations (by as much as
10 percent relative to the control group), which gradually
attenuate over the following six months. No statistically
significant effects are found for letters sent to employees
or strong-tone letters. The findings highlight (i) the
importance of framing of communications as well as the
importance of smart selection of letter recipients for
taxpayer communication campaigns, (ii) which type of
taxpayer communications were most effective in the context
of the COVID-19 pandemic, and (iii) the role that randomized
controlled trials and behavioral science can play in
strengthening the effectiveness of government policy,
particularly for public revenue mobilization. |
| format |
Working Paper |
| author |
Karver, Jonathan George Shijaku, Hilda Ungerer, Christoph T F |
| author_facet |
Karver, Jonathan George Shijaku, Hilda Ungerer, Christoph T F |
| author_sort |
Karver, Jonathan George |
| title |
Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic |
| title_short |
Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic |
| title_full |
Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic |
| title_fullStr |
Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic |
| title_full_unstemmed |
Nudging in the Time of the Coronavirus : Evidence from an Experimental Tax Trial in Albania at the Onset of a Global Pandemic |
| title_sort |
nudging in the time of the coronavirus : evidence from an experimental tax trial in albania at the onset of a global pandemic |
| publisher |
Washington, DC: World Bank |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/256481646672332016/Nudging-in-the-Time-of-the-Coronavirus-Evidence-from-an-Experimental-Tax-Trial-in-Albania-at-the-Onset-of-a-Global-Pandemic http://hdl.handle.net/10986/37114 |
| _version_ |
1764486582568484864 |