The Effect of Good Governance on Tax Compliance
Last registered on March 19, 2019

Pre-Trial

Trial Information
General Information
Title
The Effect of Good Governance on Tax Compliance
RCT ID
AEARCTR-0001332
Initial registration date
June 08, 2016
Last updated
March 19, 2019 6:27 AM EDT
Location(s)
Region
Primary Investigator
Affiliation
University of Erlangen-Nuremberg
Other Primary Investigator(s)
PI Affiliation
University of Erlangen-Nuremberg
PI Affiliation
University of Erlangen-Nuremberg
Additional Trial Information
Status
Completed
Start date
2016-06-10
End date
2016-12-31
Secondary IDs
Abstract
This randomized field experiment examines the effects of good governance on tax compliance. To examine the effects of good governance, we randomly allocate taxpayers to regimes with different efficiencies of tax administration. Our design implements three treatments with: (i) a 30% decrease in administrative costs, (ii) a reimbursement of 30% of administrative costs through a third party (iii) a full reimbursement of administrative costs through a third party, and, (iv) no changes in administrative costs. Besides the evaluation of average effects of these treatments on the tax gap and tax payments, we study the heterogeneity of treatment effects by interacting treatments with information on tax payments prior to the experiment.
External Link(s)
Registration Citation
Citation
Cagala, Tobias, Amanda Cueva and Johannes Rincke. 2019. "The Effect of Good Governance on Tax Compliance." AEA RCT Registry. March 19. https://www.socialscienceregistry.org/trials/1332/history/43654
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
Tax payers receive a letter requesting the tax payment. The content of one section of the letter varies between treatment groups.
Intervention Start Date
2016-06-10
Intervention End Date
2016-06-13
Primary Outcomes
Primary Outcomes (end points)
• Individual tax gap
• Whether or not the individual makes a (timely) tax payment
• Individual size Amount of the tax payment
• Share of individuals in a household that make a tax payment (conditional on number of individuals with a tax liability in the household > 1)
• Average tax payment/ tax gap on the household level
• Change of tax payment relative to pre-treatment baseline
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
To study the effect of administrative efficiency on tax compliance, we implement three treatments where we vary administrative costs and a control treatment where administrative costs remain unchanged. We include the information on administrative costs in the letters that request tax payments from taxpayers. The three treatments letters communicate either: (i) a 30% decrease in administrative costs, (ii) a reimbursement of 30% of administrative costs through a third party (iii) a full reimbursement of administrative costs through a third party. Individuals in the control treatment receive the same letter without information about changes in administrative costs.
Experimental Design Details
Randomization Method
Randomization was done in the office using Stata.
Randomization Unit
Households were randomly assigned to treatment within strata in two steps. First, we assigned households with one taxpayer, stratifying the sample by age quartile, baseline contribution behavior, administrative unit, and the statutory income-based tax bin. Second, we assigned households with more than one taxpayer, stratifying the sample by household type (types depend on the number and age of taxpayers in the household), baseline contribution behavior, and administrative unit.
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
29,197 households.
Sample size: planned number of observations
35,127 individuals.
Sample size (or number of clusters) by treatment arms
Approximately 8800 individuals in each treatment arm.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Ethics Commission of the School of Business and Economics at the University of Erlangen-Nuremberg
IRB Approval Date
2016-04-05
IRB Approval Number
no number associated
Analysis Plan

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Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
December 31, 2016, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
December 31, 2016, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
24,365 individual taxpayers
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
24365 individual taxpayers
Final Sample Size (or Number of Clusters) by Treatment Arms
6126 taxpayers control; 6066 taxpayers 30% cost reduction; 6090 taxpayers 30% cost refund; 6083 taxpayers 100% cost refund.
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers