Challenge
Kosovo is the youngest country in Europe and faces the challenges of creating a government and setting up systems to generate funds needed to invest and develop. In 2018, only 47% of taxpayers made even a partial payment towards their due taxes. The consequences of low tax compliance and late repayment are two-fold. Individuals accumulate debt, interest, and fines from nonpayment which also prevents them from purchasing homes or registering vehicles until these debts are paid. On the city side, it is challenging to plan the annual budget and make necessary investments in infrastructure and public services.

Design
In partnership with the OSCE Mission in Kosovo and Municipality of Pristina, we sent a behaviorally designed courtesy letter along with a copy of the first page of the property tax bill (required for payment) to prompt individuals to pay their tax liabilities in a timely manner. The letter leverages psychological concepts and well-studied design elements such as removing the hassle of finding or printing the tax bill required for payment, increasing the salience of the deadline and consequences of inaction, priming civic duty and identity (e.g. “Your support enables Pristina to continue funding the public projects necessary for our development and growth. Our city is counting on you!)”, prompting planning for the date and method of payment, and simplifying language and instructions (i.e. what you need and where you can make the payment).

New reminder letter, in Albanian

Out of 52,652 taxpayers who at the time of the intervention still owed some property taxes for 2019, 4,000 were randomly selected to be sent the new reminder letter (treatment group), while the others (control group) received no letter/communication (“business-as-usual”). The deadline for tax payment was September 30th, and the letters were delivered in a ten-day window (September 14-24th). The city employed a courier service that tracked delivery status and requested a receipt confirmation signature from the recipients. After three unsuccessful delivery attempts, the letter was left in the mailbox/ at the doorstep.

Impact
The randomized evaluation found that property owners in the treatment group had a 15.8% higher rate of making any on-time payment than those who were not (34.58% vs. 29.85%), a statistically significant difference (p < 0.001). Additionally, the intervention had a positive impact on those who were previously delinquent - and who historically are the least likely group to pay on time. Among citizens who did not pay their property taxes at all in the previous year, those in the treatment group had a 59.2% higher rate of on-time payment (11.2 % vs. 6.9%, p <0.001). Notably, these impacts were achieved despite the fact that a large proportion of the treatment group did not actually receive the intervention letter due to incorrect or incomplete addresses, or other reasons. Incorrect taxpayer addresses were a significant hurdle to delivery of the intervention, and reliability of the delivery status data was also a challenge for analysis. Source: B-Hub