How to improve tax compliance? Evidence from population-wide experiments in Belgium

Jan-Emmanuel De Neve, Clement Imbert, Johannes Spinnewijn , Teodora Tsankova, Maarten Luts

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Abstract

We study the impact of simplification, deterrence and tax morale on tax compliance. We ran four natural field experiments varying the communication of the tax administration with the universe of income taxpayers in Belgium throughout the tax process. A consistent picture emerges across experiments: (i) simplifying communication substantially increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective, and often backfires. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. We find that simplification is far more cost-effective, allowing for substantial savings on enforcement costs.
Original languageEnglish
Pages (from-to)1425-1463
JournalJournal of Political Economy
Volume129
Issue number5
DOIs
Publication statusPublished - May 2021

Keywords

  • tax compliance
  • field experiments
  • simplification
  • enforcement

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