Improving Tax Compliance without Increasing Revenue: Evidence from Population-Wide Randomized Controlled Trials in Papua New Guinea

Christopher Hoy, Luke McKenzie and Mathias Sinning ()

Economic Development and Cultural Change, 2024, vol. 72, issue 2, 691 - 723

Abstract: We study the effect of “nudges” on taxpayers who have varying tax-compliance histories in Papua New Guinea. We present the results from two population-wide randomized controlled trials conducted in a setting that is characterized by low compliance rates and a lack of effective enforcement. We test the effect of text messages, flyers, and emails that remind taxpayers of declaration due dates and provide information about the public benefits of paying taxes. We find that the treatments increased the number of tax declarations filed without increasing the amount of tax paid because the taxpayers who responded to the nudges reported a tax liability of zero. This result is consistent across tax types, communication channels, and time periods. We also find that the treatments had no effect on previously nonfiling taxpayers. Collectively, our results illustrate that taxpayers who face the lowest cost of compliance are the most likely to respond to a nudge.

Date: 2024
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Related works:
Working Paper: Improving Tax Compliance without Increasing Revenue: Evidence from Population-Wide Randomized Controlled Trials in Papua New Guinea (2021)
Working Paper: Improving Tax Compliance without Increasing Revenue: Evidence from Population-Wide Randomized Controlled Trials in Papua New Guinea (2020)
Working Paper: Improving tax compliance without increasing revenue: Evidence from population-wide randomized controlled trials in Papua New Guinea (2020)
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