Nudging Taxpayer Registration Field Experimental Evidence on Backring Incentives

• Published in: Proceedings (Conference on Taxation) Vol. 113; pp. 1 - 29
• Main Authors: Eguino, Huáscar, Roman, Soraya, Schächtele, Simeon
• Format: Journal Article
• Language: English
• Published: National Tax Association 01-01-2020
• Subjects: Nonfiling & Expanding the Tax Net
• ISSN: 1549-7542; 2377-5661

Governments in Latin America raise little revenue from property taxation, despite economic arguments for its efficiency and equity. Adequate registry information would support consistent collection, but registries are costly to establish and maintain. Compared to tax collection, field experimental evidence on low-cost interventions in this area is scarce. This paper provides the first such evidence for online tax registration. The municipality of Fortaleza, Brazil, randomized 163K property taxpayers into three groups. To the first group it sent an e-mail asking for registration; to the second group an e-mail that additionally offered a lottery reward. A third group not contacted serves as control. Both e-mails increased registration, but the lottery significantly less so. The e-mails were most effective among compliant taxpayers as well as men, intermediate age groups and intermediate property values. We make a another contribution by providing evidence on motivational crowing out associated with the lottery incentive. Here, our post-experimental survey offers more direct evidence than previous studies. We hypothesize that the back firing effect of the lottery relates to an inadvertent signal about non-enforcement. In sum, the results suggest that nudging for tax registration works for parts of the population and that monetary incentives may be counterproductive.