Casting a Wider Tax Net: Experimental Evidence from Costa Rica

Anne Brockmeyer, Spencer Smith, Marco Hernandez and Stewart Kettle

American Economic Journal: Economic Policy, 2019, vol. 11, issue 3, 55-87

Abstract: The majority of firms in developing countries are informal, yet even among registered firms, tax filing rates are low. We argue that non-filing of taxes among registered firms constitutes an important intermediate form of informality, which can be tackled cost-effectively. Using a randomized experiment in Costa Rica, we show that credible enforcement emails increased the tax payment rate (amount) by 3.4 p.p. (US$15) among previously non-filing firms. Emails that highlight third-party reports of a firm's transactions further increased compliance. The effect persisted over two years, and treated firms became more likely to report transactions with other firms, facilitating future tax enforcement.

JEL-codes: H25 H26 K34 O17 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pol.20160589
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Citations: View citations in EconPapers (19)

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