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Income Tax Payers Are Not All the Same – A Behavioral Letter Experiment in Eswatini

journal contribution
posted on 2024-10-04, 13:38 authored by Fabrizio Santoro
Very little is known about why taxpayers in sub-Saharan Africa pay their taxes. This article reports results from a nationwide randomized controlled trial in Eswatini, nudging more than 20,000 income tax payers with behaviorally-informed mailings, building on deterrence, facilitation, and trust paradigms. This study is the first to target three different categories of taxpayers at the same time – non-filers, nil-filers and active filers, and targets both companies and individual taxpayers. Most of the literature focuses on active filers. The results show that nudging is very effective with non-filers, especially when controlling for actual collection of the letter – any mailing increases the probability of filing by 1.7 percentage points (p.p.), or 20 percent of the control group mean. Deterrence is particularly effective for non-filing companies – increasing filing by 3.9 p.p., whereas individuals react more to an instructional nudge. Conversely, nil-filers do not respond to a nudge. A trust-based mailing had the opposite of the intended effect with active taxpayers, but they are less likely to nil-file when nudged.

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Publisher

The University of Chicago Press Journals

Citation

Santoro, F. (2022) 'Income Tax Payers Are Not All the Same – A Behavioral Letter Experiment in Eswatini', Economic Development and Cultural Change Volume 70, Number 4, DOI: 10.1086/722332

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Economic Development and Cultural Change Volume 70, Number 4

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  • VoR (Version of Record)

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Article

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© The University of Chicago

Country

Eswatini

Language

en

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Default project::9ce4e4dc-26e9-4d78-96e9-15e4dcac0642::600

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    International Centre for Tax and Development

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