How do tax reminders to debtors affect their will to pay? · Matúš Sloboda & Patrik Pavlovský...

Ústav verejnej politikyFakulta sociálnych a ekonomických vied

Univerzita Komenského v Bratislave

How do tax reminders to debtors affect their will to pay? The field experiment – Prievidza, Slovakia

Matúš Sloboda & Patrik Pavlovský

FIELD EXPERIMENT - PRIEVIDZA

A CONTEXT

Behavioural public policy which cares about its citizens

Potential areas:- Tax compliance- Safety- Bureaucracy- Public spaces- Education- Waste separation

CIVITA CENTER

WHAT DO WE DO?

Reminders

Debt on waste disposal tax

HOW DO WE DO IT?

Target / Explore / Solution / Testing /Scaling- The Behavioral Insights Team

TARGET / Explore / Solution / Testing /Scaling

Insufficient tax revenue

additional taxcomplianceenforcement generates only 60% compliance

POLICY CHALLENGE

PD: 74% (+15%)SVK: 71% (IFP, 2018)

BEHAVIOR


Increase the voluntary tax compliance after the deadline

THE GOAL


2016 residents of Prievidza, who did not pay the debt on the local taxes by the 31.12.2018

SAMPLE▫ 1102 males / 914 females▫ Age:

� MEDIAN: 44 years� MEAN: 45 years

▫ 1285 debtors are second or moretimes debtors▫ Total debt 292 500 eur▫ Median debt 82 eur

1/2019TAX NOTICE (May)

Target/ EXPLORE/ Solution / Testing /Scaling

CITIZEN JOURNEY

STANDARD DEBT NOTICE

(Oct)

PRE-DISTRAINT NOTICE

(March 2020)

TAX COMPLIANCE DEADLINE (Aug)

FINANCIAL AUDIT (Jan)

Web-page / Call centre


Only 1-time notification

Opacity of the information provided

Insignificant ´call-to-action´elements

THE BARIERS

STANDARD DEBT NOTICE


Warning against negative consequences

THE FUEL

Target/ Explore / SOLUTION / Testing /Scaling

REMINDER MORAL SUASION

frame

Social norms + moral suasion

QR that loads the payment data common for all debtors

CTA

REMINDER1/2019

NEW CITIZEN JOURNEY

NEW DEBT NOTICE (Oct)

PRE-DISTRAINT NOTICE (March 2020)

Web-page / Call centre

FINANCIAL AUDIT (Jan)

Target/ Explore / SOLUTION / Testing /Scaling

MORAL SUASION:„9 out of 10 inhabitant of Prievidza believes that paying taxes and in this way support the functioning of the city is the right thing.”

PUBLIC GOOD - FRAME:„Prievidza is prospering thanks to you. In last year, we managed to: ..... Help again this year. By paying your tax on communal waste right now according to the instructions, you cultivate your environments immediately.“

Sorting by street (statistically adjusted -each group sa similar distribution of debtors, noteorious debtors exluded), than ascribing 1/3 to control group and rest to the treatment groups – two framings

CONTROL (no reminder)

TREATMENT 1 (reminder)

Target/ Explore/ Solution / TESTING /Scaling

RANDOMIZATION

TREATMENT 2

RQ: How does the reminders affect debtors´ tax compliance?

• Independent variable:▫ Reminder received (yes/no) and which frame

• Dependent variables:▫ Compliance 1 (Did the debtor pay the debt?)▫ Compliance 2 (How fast did the debtor pay?)

• Control variables:▫ Basic demographics (sex, age group)▫ Fidelity (first time debtor? Yes/No)▫ Debt´s amount (continuous)

Target/ Explore/ Solution / TESTING /Scaling

PITFALLS – COLLECTION AND PROCESING OF DATA

The privacy and security of personal data about individuals within the EU (GDPR)

• Time• Distress• Reluctance• Misunderstanding

PITFALLS: COLLECTION AND PROCESING OF DATA

LESSONS LEARNED

• The realization of your field experiment will take quite some time▫ 70 % of your effort is preparation

• The executives have different approach than clerks

• Its not that unlikely you will have to measure adequate baseline data by yourself

Ústav verejnej politikyFakulta sociálnych a ekonomických vied

Univerzita Komenského v Bratislave

THANK YOU

[email protected] [email protected]

CIVITA CENTER

mailto:[email protected]

How do tax reminders to debtors affect their will to pay? · Matúš Sloboda & Patrik Pavlovský...

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