The Effect of Good Governance on Tax Compliance

Last registered on April 20, 2021

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
April 20, 2021, 12:58 PM EDT

Locations

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. 2021. "The Effect of Good Governance on Tax Compliance." AEA RCT Registry. April 20. https://doi.org/10.1257/rct.1332-2.1
Former Citation
Cagala, Tobias et al. 2021. "The Effect of Good Governance on Tax Compliance." AEA RCT Registry. April 20. https://www.socialscienceregistry.org/trials/1332/history/90051
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

Analysis Plan Documents

RCT Registry_Analysis Plan2.pdf

MD5: debb88a85127be04360153e337259925

SHA1: 7b7f6d60f4efe7c982774ca41698919314f719e0

Uploaded At: April 20, 2021

RCT Registry_Analysis Plan

MD5: 36ce424a5e8b5d57e7295540208744b8

SHA1: 5129039c9b5196c81b1332e42fe5b25278450a2d

Uploaded At: June 08, 2016

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
December 31, 2016, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
December 31, 2016, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
See info on total number of observations
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
24,365 individuals sampled in total. For 8,617 individuals, sufficient information on baseline income became available after implementation for the respective individuals to be included in the final analysis. 6,433 of those individuals belong to one of the three experimental conditions used for estimation.
Final Sample Size (or Number of Clusters) by Treatment Arms
About 2150 by treatment arm.
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials