General Information
Project description
The Ministry of Finance of the Republic of Latvia collaborated with the World Bank on a holistic review of the country's tax system, an input to the design of a new, improved tax strategy. The State Revenue Service (SRS), Latvia's tax authority, worked with the Mind, Behavior, and Development (eMBeD) Unit at the World Bank to pilot a field experiment to increase tax compliance. The experiment involved sending preemptive, behaviorally-informed email messages to taxpayers with a share of income from self-employment who had previously demonstrated noncompliance with the submission of Annual Income Declaration (AID) forms.
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?
How hypothesis was tested
The intervention targeted individuals who, while
formally part of the tax system, are partially or fully
self-employed and differ from the average taxpayer in
at least two ways: 1) they failed to submit their AID by
the deadline in one or more of the 2013-2015 tax years
and 2) their ultimate submission was substantially
late. In advance of the 2017 deadline, a total of 4,324
taxpayers identified by the SRS randomly received
one of three treatment emails or received no message
as part of a control group. Consequently, 1,081
individuals received each message or were randomly
placed in the control group.
The first message was a simple reminder. The
message included three short, easy-to-read
sentences to remind individuals of the tax timeline. It
also included a link to the online submission system
and contact information (i.e. a phone number) in case
of questions. Signing off with the name of the Chief
Tax Inspector made the message more personal, as
the names of the recipients could not be included for
technical reasons.
The second message used an omission/commission
approach. In addition to the text from the simple
reminder, this email stated that previously missed
deadlines were considered unintentional and
inadvertent (i.e. an honest omission). However,
future failures would be considered a deliberate act
of non-compliance (i.e. commission). Framing noncompliant behavior as deliberate reduces ambiguity
about inaction, increases moral obligations towards
action, and likely increases perceived deterrence.
The third message relied on social norms. Paired
with the simple reminder text, this email highlighted
the descriptive norm that an increasing number of
taxpayers file their AID by the deadline each year.
This drew on the insight that people tend to follow
others, in part due to normative inferences about
what others believe is the right thing to do. While
social norms messaging often includes a specific
descriptive statistic on compliance, language on
the increasing trend was included as the specific
statistics were unavailable.
Additional information
Who is behind the project?
Project status:
Completed
Methods
What is the project about?
Date published:
25 June 2021