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Shaming for tax enforcement: Evidence from a new policy

Nadja Dwenger and Lukas Treber

No 21-2018, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences

Abstract: Can public shaming increase tax compliance through social pressure? Many tax authorities make ample use of public shaming. However, empirical evidence from outside the laboratory on how a new shaming law affects overall compliance is lacking. We provide the first evidence from the field, exploiting comprehensive administrative tax data and the introduction of a novel naming-and-shaming policy in Slovenia in 2012. The policy aims to reduce outstanding tax debt among the self-employed and corporations. Our empirical strategy exploits the variation across taxpayers in ex ante exposure to the shaming policy. We find that taxpayers reduce their tax debt by 8.5% to avoid shaming, particularly in industries where reputational concerns are likely to be important. The publication of the first naming-and-shaming list further reduces tax debt among shamed taxpayers because of social learning. This effect, however, is marginal in terms of revenue and tapers off quickly.

Keywords: compliance; tax debt; shaming; enforcement; social image concerns; penalty (search for similar items in EconPapers)
JEL-codes: H26 D1 K34 K42 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-iue, nep-law, nep-pbe and nep-pub
Date: 2018
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