The effects of official and unofficial information on tax compliance

Filomena Garcia, Luca David Opromolla, Andrea Vezzulli () and Rafael Marques

Journal of Economic Psychology, 2020, vol. 78, issue C

Abstract: The administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where subjects declare their income after receiving either a communication of the average tax evasion rate (“official information”) or a private message from a group of randomly matched peers about their tax behavior (“unofficial information”). We use the experimental data to estimate a dynamic econometric model of tax evasion and find three main results. First, tax compliance is very persistent, but less so in the presence of information. Second, the higher the officially communicated past tax evasion rate, the higher the degree of persistence: former evaders are more likely to evade again (and evade more), and former compliant individuals are more likely to comply again (and, when evading, evade less). Third, when an unofficial communication of past evasion (compliance) from all their peers is received, both former evaders and compliant individuals are more likely to evade (comply) again.

Keywords: Tax morale; Information; Tax evasion; Experiment; Peer effects; Social norms; Self-categorization (search for similar items in EconPapers)
JEL-codes: C24 C92 D63 H26 Z13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: The Effects of Official and Unofficial Information on Tax Compliance (2018)
Working Paper: The effects of official and unofficial information on tax compliance (2018)
Working Paper: The Effects of Official and Unofficial Information on Tax Compliance (2018)
Working Paper: The effects of official and unofficial information on tax compliance (2018)
Working Paper: The effects of official and unofficial information on tax compliance (2018)
Working Paper: The effects of official and unofficial information on tax compliance (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:78:y:2020:i:c:s0167487020300222

DOI: 10.1016/j.joep.2020.102265

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