Yogama, E.A., Gray, D.J. and Rablen, M.D. orcid.org/0000-0002-3521-096X (2024) Nudging for prompt tax penalty payment: evidence from a field experiment in Indonesia. Journal of Economic Behavior and Organization, 224. pp. 548-579. ISSN 0167-2681
Abstract
We conduct a randomised controlled trial in Indonesia to evaluate the effect of three intervention letters on tax penalty compliance behaviour. Over 10,000 individual taxpayers are randomly assigned to receive either a deterrence, information, or simplification letter, or no letter. Our results indicate that simplification, which makes paying a penalty less burdensome administratively by providing billing codes to pay the penalties, yields the highest probability of timely settlement, increasing compliance by 32% compared to the control group. Deterrence also positively impacts penalty compliance, increasing timely settlement rates by 27%. The least effective intervention is the information letter. Although associated with a 10% increase in timely settlement, this effect is statistically insignificant at the 10% confidence level. Our results suggest that strategic messaging by tax authorities in developing countries can be a cost-effective tool for improving tax penalty payment compliance.
Metadata
Item Type: | Article |
---|---|
Authors/Creators: |
|
Copyright, Publisher and Additional Information: | © 2024 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). |
Keywords: | Tax penalties; Tax compliance; RCT; Simplification; Deterrence; Information; Indonesia |
Dates: |
|
Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 17 Jun 2024 10:46 |
Last Modified: | 28 Jun 2024 09:04 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.jebo.2024.06.003 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:213219 |