Commitment to pay taxes: a field experiment on the importance of promise

Vol: 
TTPI - Working Paper 10/2016
Author name: 
Ann-Kathrin Koessler
Benno Torgler
Lars P. Feld
Bruno S. Frey
Year: 
2016
Month: 
November
Abstract: 

The ability of a tax authority to successfully collect taxes depends critically on both its relationship with the taxpayers and how strongly these taxpayers are committed to contributing to the common good. We present evidence on a new non-intrusive approach aimed at fostering the commitment to pay taxes. Using a between-subject design in a unique field setting, we experimentally test whether tax compliance can be increased by linking a voluntary promise of timely payment to a reward. We measure the change induced by an additional compliance promise through identifying the pure reward effect. We find that although previously compliant taxpayers are more likely to make a promise, the commitment to do so can improve payment behaviour. This effect, however, is strongly dependent on the type of reward to which the promise is linked. Compliance only increases when the reward is non-financial. No compliance effect is observed if cash is offered in return for promise fulfilment.

Updated:  25 June 2019/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team