General Information
Project description
Tax amnesties, a limited-time opportunity for a specified group of taxpayers to pay a defined amount of tax liabilities, are broadly used across countries because they generate short-term revenue gains. However, evidence suggest that tax amnesties fail to have long-term effects, and in some cases, they generate negative effects on compliance. With the goal of evaluating the impact of tax amnesties, this experiment relies on the behavioral principle of limited attention and redesigns the communication notice sent to taxpayers by the city of Santa Fe, Argentina in order to reduce cognitive effort and increase understanding of the benefits of participating in tax amnesties.
Source: B-Hub
Detailed information
Final report: Is there a final report presenting the results and conclusions of this project?
Final report
Pre-analysis plan: Is there a pre-analysis plan associated with this registration?
Hypothesis
Does redesigning the communication notice sent to taxpayers reduce cognitive effort and increase understanding of the benefits of participating in tax amnesties?
How hypothesis was tested
Two field experiments were run during a tax amnesty period in May 2017 in the city of Santa Fe (Argentina) with more than 54,000 taxpayers who had failed to comply with the payment of their property tax bill (they received the bill but they did not make a payment). The first experiment included taxpayers who owed bills from January 2011 to December 2012 (about 16,000 taxpayers). The second experiment included taxpayers who accumulated debts between January 2013 and March 2017 (about 37,000 taxpayers). The difference in duration of the debt is relevant since debts prescribe after 5 years if the government doesn’t initiate the judicial process, so authorities are likely to direct resources to older debtors and take judicial enforcement steps absent any action by debtors.
In both experiments, standard notices mailed by the government to inform about the tax amnesty opportunity were redesigned to show important information in a more prominent way and reduce information processing or cognitive costs for delinquent taxpayers. Color and other visual techniques were used, as well as an explanation of the different payment plans, including a detailed computation of the reduction in interests that each payment plan provides. The redesigned letter in the first experiment also increased the saliency of a deterrence message that appeared in the original notice to this population. The second experiment included two slightly different versions of the redesigned letter, the only difference being that version B added a column with the computation of interest saved in monetary terms under each plan as opposed to showing just a percentage calculation. Control groups in both experiments received the original notices without redesign.
(Source: B-Hub)
Dependent variables
Probability of taxpayers taking part to the tax amnesty
Amount paid by those taxpayers
Analyses
Comparison with control
Possible spillover effects
Sample Size. How many observations will be collected or what will determine sample size?
More than 54,000 taxpayers
Who is behind the project?
Project status:
Completed
Methods
What is the project about?
Date published:
25 June 2021