AEA RCT Registry

Trial Information

General Information

Title

The incidence of VAT evasion: experimental evidence from Italy

RCT ID

AEARCTR-0012415

Initial registration date

January 25, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

January 31, 2024, 11:43 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated

March 20, 2024, 11:09 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country

Italy

Region

Rome

Primary Investigator

Name

Leonardo Maria Giuffrida

Affiliation

ZEW Mannheim

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Giacomo Brusco

PI Affiliation

University of Tuebingen

PI Name

Albrecht Bohne

PI Affiliation

ZEW Mannheim

Additional Trial Information

Status

In development

Start date

2023-02-17

End date

2024-04-30

Keywords

Behavior, Crime, Violence, & Conflict, Firms & Productivity, Other

Additional Keywords

Tax Evasion, Value Added Tax, Tax incidence.

JEL code(s)

H22, H26.

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

Who benefits from VAT tax evasion, and how are the rents distributed between sellers and buyers? How much of the “saved” taxes does the seller pass on to the consumer, and what does this depend on? When the tax of a commodity or service is evaded, it is unclear who reaps the benefits. While the general distributional effect of taxes (incidence) has been frequently studied in the literature, little is known about how the rents of evasion are split between consumers and producers. While some theoretical general-equilibrium models would predict factor prices adjust so that firm owners do not benefit from evasion in equilibrium, we have very limited empirical evidence, which so far has only been based on online surveys. This project aims to quantify the incidence of evasion by conducting an innovative survey-based field experiment in Italy. Thanks to a randomized treatment design, we elicit average price differentials by the method of payment in order to back out what portion of evaded taxes are passed on to consumers.

External Link(s)

Registration Citation

Citation

Bohne, Albrecht, Giacomo Brusco and Leonardo Maria Giuffrida. 2024. "The incidence of VAT evasion: experimental evidence from Italy." AEA RCT Registry. March 20. https://doi.org/10.1257/rct.12415-1.1

Sponsors & Partners

Interventions

Intervention(s)

Specifics of the intervention will be pre-registered as hidden and released upon completion of the study.

Intervention Start Date

2024-01-29

Intervention End Date

2024-04-01

Primary Outcomes

Primary Outcomes (end points)

Price quotes.

Primary Outcomes (explanation)

Quoted prices will be directly elicited from in our survey.

Secondary Outcomes

Secondary Outcomes (end points)

Issuance of receipts.

Secondary Outcomes (explanation)

For a randomly chosen subsample, enumerators will conduct additional visits and record whether a receipt was issued on a small transaction.

Experimental Design

Specifics of the experimental design will be pre-registered as hidden and released upon completion of the study.

Experimental Design Details

Not available

Randomization Method

Each establishment will receive two interviews by two distinct enumerators, one in the treatment group and one in the control group. The order of the two visits will be randomized ex-ante through a pseudo-random number generator.

Randomization Unit

Randomization will occur at the establishment level. Each establishment will be visited by our enumerators twice, once for a control visit and once for a treatment visit. The order of the visits will be randomized for each establishment. In a third visit, a distinct third enumerator will conduct a small transaction with each establishment and record whether a legally valid receipt is issued.

Was the treatment clustered?

No

Experiment Characteristics

Sample size: planned number of clusters

Each establishment will receive two visits. Randomization will occur at the establishment level (no clustering) and will determine in which order the two visits will occur.

Sample size: planned number of observations

500 establishments will be surveyed two times each, totalling 1000 observations.

Sample size (or number of clusters) by treatment arms

1000 establishment visits. Each of 500 establishments will be visited twice.

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

According to our calculations, MDE for price is 2.39 Euros. This MDE is based on variance in the price quotes we gathered during our pilot survey. With a baseline average price quote of 31.89 euros per person and an applicable VAT rate of 10%, this means we would be able to identify full pass-through of evasion to consumer prices. In our analysis plan we also give details on how to perform this calculation again conditional on restaurant fixed effects. Restaurant fixed effects are bound to substantially decrease the conditional variance of our outcome and thereby increase our statistical power. Unfortunately, we did not re-sample restaurants in our pilot survey which means we cannot perform this calculation currently. We provide more details in our attached analysis plan.

Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name

University of Tuebingen, Faculty of Economics and Social Sciences, Ethics Committee

IRB Approval Date

2024-02-19

IRB Approval Number

AZ: A2.5.4-256.4_hb