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Behavioral Insights and Business Taxation: Evidence from Two Randomized Controlled Trials

Nicholas Biddle (), Katja Fels () and Mathias Sinning
Additional contact information
Nicholas Biddle: Australian National University
Katja Fels: Ruhr University Bochum

No 10795, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents the findings of two Randomized Controlled Trials (RCTs) that were conducted in collaboration with the Australian Taxation Office (ATO). The first trial tests the effect of changes to letters (timing, social norms, color, and provision of information about charitable donations) on response rates of businesses, the timing of payments and the amount of tax debt payments. The second trial consists of two parts. The first part aims to raise awareness of the relevance of tax debt payment by changing internal guidelines used by field auditors. The second part focuses on studying the effect of changing the phone script used by desk auditors to offer assistance with payment arrangements and simplifying a follow-up letter. The findings of the first trial indicate that none of the treatments had a significant effect on any of the outcome measures considered. In contrast, the results of the second trial indicate that changing the phone script of desk auditors and simplifying the follow-up letter reduced the proportion of default assessments raised by the ATO significantly, suggesting that businesses are responsive to certain types of nudges.

Keywords: behavioral insights; business taxation; tax compliance; nudging (search for similar items in EconPapers)
JEL-codes: C93 H25 H26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-iue and nep-pbe
Date: 2017-05
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Published in: Journal of Behavioral and Experimental Finance, 2018, 18, 30-49

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