Behavioral Insights and Business Taxation: Evidence from Two Randomized Controlled Trials

43 Pages Posted: 5 Jun 2017

See all articles by Nicholas Biddle

Nicholas Biddle

ANU Centre for Social Research and Methods

Katja Fels

Ruhr University of Bochum

Mathias Sinning

Australian National University (ANU) - Crawford School of Public Policy

Abstract

This paper presents the findings of two Randomized Controlled Trials (RCTs) that were conducted in collaboration with the Australian Taxation Office (ATO). The first trial tests the effect of changes to letters (timing, social norms, color, and provision of information about charitable donations) on response rates of businesses, the timing of payments and the amount of tax debt payments. The second trial consists of two parts. The first part aims to raise awareness of the relevance of tax debt payment by changing internal guidelines used by field auditors.The second part focuses on studying the effect of changing the phone script used by desk auditors to offer assistance with payment arrangements and simplifying a follow-up letter. The findings of the first trial indicate that none of the treatments had a significant effect on any of the outcome measures considered. In contrast, the results of the second trial indicate that changing the phone script of desk auditors and simplifying the follow-up letter reduced the proportion of default assessments raised by the ATO significantly, suggesting that businesses are responsive to certain types of nudges.

Keywords: tax compliance, business taxation, behavioral insights, nudging

JEL Classification: C93, H25, H26

Suggested Citation

Biddle, Nicholas and Fels, Katja and Sinning, Mathias, Behavioral Insights and Business Taxation: Evidence from Two Randomized Controlled Trials. IZA Discussion Paper No. 10795, Available at SSRN: https://ssrn.com/abstract=2979943 or http://dx.doi.org/10.2139/ssrn.2979943

Nicholas Biddle (Contact Author)

ANU Centre for Social Research and Methods ( email )

Beryl Rawson Building (13)
Canberra, ACT 0200
Australia

Katja Fels

Ruhr University of Bochum ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Mathias Sinning

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://www.mathiassinning.com

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