Nudging businesses to pay their taxes: Does timing matter?

Christian Gillitzer and Mathias Sinning ()

Journal of Economic Behavior & Organization, 2020, vol. 169, issue C, 284-300

Abstract: This paper provides empirical evidence on the implications of the timing of reminders by studying the effect of varying the timing of reminder letters to taxpayers on their payment behavior. The collection of unpaid tax debts constitutes a considerable challenge for tax authorities. We discuss potential mechanisms through which reminders may affect taxpayers’ behavior and study the payment behavior of business taxpayers in a field experiment in Australia. We find that a simple reminder letter increases the probability of payment by about 25 percentage points relative to a control group that does not receive a letter from the tax authority. However, variation over a three-week period in the timing of the reminder letter has no effect on the probability of payment within seven weeks of the due date. Our findings indicate that sending reminders early results in faster payment of debts with no effect on the ultimate probability of payment.

Keywords: Tax compliance; Business taxation; Natural field experiment; Behavioral insights (search for similar items in EconPapers)
JEL-codes: C93 H25 H26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Nudging Businesses to Pay Their Taxes: Does Timing Matter? (2018)
Working Paper: Nudging businesses to pay their taxes: Does timing matter? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:169:y:2020:i:c:p:284-300

DOI: 10.1016/j.jebo.2019.11.020

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