Details
| Original language | English |
|---|---|
| Pages (from-to) | 78-98 |
| Number of pages | 21 |
| Journal | European economic review |
| Volume | 115 |
| Publication status | Published - Jun 2019 |
| Externally published | Yes |
Abstract
A tax authority's ability to successfully collect taxes depends on its relationship with the taxpayers as well as their commitment to contribute to the common good. In this paper, we examine the effect of promises on tax compliance aimed at fostering taxpayer commitment. First, in a field experiment, we investigate whether tax compliance changes when taxpayers make a formal promise to pay their taxes on time with compliance rewarded by entry into a lottery for either a financial or nonfinancial (in-kind) reward. We then complement this analysis with a laboratory experiment in which we measure the effect of promises in the different compliance domain of tax honesty and contrast the effect of a pure promise to pay with schemes that pair the promise with a reward offer. We find that taxpayers with a history of compliance or high scores on tax morale are more likely to make the promise, but solely offering the possibility to make a promise does not lead to a change in compliance behavior. Whether or not compliance improves depends on the type of reward to which the promise is linked. In our experimental analyses, for example, compliance only increases if the reward for promise fulfillment is nonfinancial.
Keywords
- Commitment, Field experiment, Promise, Psychological tax contract, Supportive incentives, Tax compliance
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: European economic review, Vol. 115, 06.2019, p. 78-98.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Commitment to pay taxes
T2 - Results from field and laboratory experiments
AU - Koessler, Ann Kathrin
AU - Torgler, Benno
AU - Feld, Lars P.
AU - Frey, Bruno S.
PY - 2019/6
Y1 - 2019/6
N2 - A tax authority's ability to successfully collect taxes depends on its relationship with the taxpayers as well as their commitment to contribute to the common good. In this paper, we examine the effect of promises on tax compliance aimed at fostering taxpayer commitment. First, in a field experiment, we investigate whether tax compliance changes when taxpayers make a formal promise to pay their taxes on time with compliance rewarded by entry into a lottery for either a financial or nonfinancial (in-kind) reward. We then complement this analysis with a laboratory experiment in which we measure the effect of promises in the different compliance domain of tax honesty and contrast the effect of a pure promise to pay with schemes that pair the promise with a reward offer. We find that taxpayers with a history of compliance or high scores on tax morale are more likely to make the promise, but solely offering the possibility to make a promise does not lead to a change in compliance behavior. Whether or not compliance improves depends on the type of reward to which the promise is linked. In our experimental analyses, for example, compliance only increases if the reward for promise fulfillment is nonfinancial.
AB - A tax authority's ability to successfully collect taxes depends on its relationship with the taxpayers as well as their commitment to contribute to the common good. In this paper, we examine the effect of promises on tax compliance aimed at fostering taxpayer commitment. First, in a field experiment, we investigate whether tax compliance changes when taxpayers make a formal promise to pay their taxes on time with compliance rewarded by entry into a lottery for either a financial or nonfinancial (in-kind) reward. We then complement this analysis with a laboratory experiment in which we measure the effect of promises in the different compliance domain of tax honesty and contrast the effect of a pure promise to pay with schemes that pair the promise with a reward offer. We find that taxpayers with a history of compliance or high scores on tax morale are more likely to make the promise, but solely offering the possibility to make a promise does not lead to a change in compliance behavior. Whether or not compliance improves depends on the type of reward to which the promise is linked. In our experimental analyses, for example, compliance only increases if the reward for promise fulfillment is nonfinancial.
KW - Commitment
KW - Field experiment
KW - Promise
KW - Psychological tax contract
KW - Supportive incentives
KW - Tax compliance
UR - http://www.scopus.com/inward/record.url?scp=85063112417&partnerID=8YFLogxK
U2 - 10.1016/j.euroecorev.2019.02.006
DO - 10.1016/j.euroecorev.2019.02.006
M3 - Article
AN - SCOPUS:85063112417
VL - 115
SP - 78
EP - 98
JO - European economic review
JF - European economic review
SN - 0014-2921
ER -