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Trial Title
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Before
Applying Behavioral Insights to Boost Tax Compliance in Papua New Guinea
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Applying Behavioral Insights to Improve Tax Compliance in Papua New Guinea
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Abstract
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Before
This is a study about boosting tax compliance by using behavioral Insights in Papua New Guinea
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The aim of this trial is to test the effectiveness of messages to improve tax compliance in Papua New Guinea (PNG) in a setting where the threat of punishment from non-compliance lacks credibility. We will test two types of interventions in collaboration with the Internal Revenue Commission (IRC). Firstly, we will test the effects of SMS messages on taxpayer behavior. Two alternative messages will be sent to taxpayers to remind them to lodge their tax return (Treatment Group 1A) and to inform them that their taxes are being used to fund education, healthcare and infrastructure (Treatment Group 2A). A control group will not receive any communication from the IRC over the duration of the trial (Control Group A). Taxpayers are being assigned randomly to the two treatment groups and to the control group. Secondly, we will test the effect of a flyer that is designed to encourage taxpayers to pay their taxes by informing taxpayers that their taxes are being used to fund education and healthcare. Taxpayers that receive a letter from the IRC for notification purposes will be randomly assigned to a group that will receive a letter and a flyer (Treatment Group 1B) and a group that will only receive a letter but no flyer (Control Group B).
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JEL Code(s)
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Before
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C93, H24, H25, H26
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Last Published
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Before
April 01, 2019 06:32 PM
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April 04, 2019 09:54 AM
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Intervention (Public)
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Before
There are two types of interventions we examine. Firstly, we will test the effect of two types of SMS messages. Secondly, we test the effect of adding a flyer to letters from the tax authority that is designed to encourage tax payers to pay their taxes.
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Two types of interventions will be studied:
1. SMS messages: a message that reminds taxpayer to lodge their tax return (Treatment 1A) and a message that informs taxpayers that their taxes will be used to fund education, healthcare and infrastructure (Treatment 2A). The messages are attached in Appendix A at the end of the pre-analysis plan.
2. Flyer: a flyer that informs taxpayers that their taxes will be used to fund education and healthcare (Treatment 1B). A draft flyer is attached in Appendix A of the pre-analysis plan.
Treatments will be compared to randomly assigned control groups consisting of individuals who are not being contacted by the IRC over the duration of the trial. The treatment effect of each intervention will be measured by comparing average outcomes between treatment and control groups. No interaction between treatments will be tested.
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Primary Outcomes (End Points)
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Before
The main outcomes of interest are:
Timing of Salaries and Wages Tax lodgement
Number of times Salaries and Wages Tax was lodged
Amount of Salaries and Wages Tax paid
Total payment of Salaries and Wages
Number of employees reported by tax payers
Timing of Goods and Services Tax lodgement
Number of Goods and Services Tax was lodged
Amount of Goods and Services Tax paid
Gross Income reported by tax payer
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After
The main outcomes of interest are: Timing of SWT lodgement; Number of times SWT was lodged; Amount of SWT paid; Total payment of SWT; Number of employees reported by taxpayers; Timing of GST lodgement; Number of GST was lodged; Amount of GST paid; Gross income reported by taxpayer
Timing of Salaries and Wages Tax lodgement
Number of times Salaries and Wages Tax was lodged
Amount of Salaries and Wages Tax paid
Total payment of Salaries and Wages
Number of employees reported by tax payers
Timing of Goods and Services Tax lodgement
Number of Goods and Services Tax was lodged
Amount of Goods and Services Tax paid
Gross Income reported by tax payer
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Experimental Design (Public)
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Before
The impact of the interventions will be determined by conducting two cross-sectional randomized control trials at the individual level.
The outcome data will be collected by the tax authority in Papua New Guinea.
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After
We will test two types of interventions in collaboration with the Internal Revenue Commission (IRC). Firstly, we will test the effects of SMS messages on taxpayer behavior. Two alternative messages will be sent to taxpayers to remind them to lodge their tax return (Treatment Group 1A) and to inform them that their taxes are being used to fund education, healthcare and infrastructure (Treatment Group 2A). A control group will not receive any communication from the IRC over the duration of the trial (Control Group A). Taxpayers are being assigned randomly to the two treatment groups and to the control group. Secondly, we will test the effect of a flyer that is designed to encourage taxpayers to pay their taxes by informing taxpayers that their taxes are being used to fund education and healthcare. Taxpayers that receive a letter from the IRC for notification purposes will be randomly assigned to a group that will receive a letter and a flyer (Treatment Group 1B) and a group that will only receive a letter but no flyer (Control Group B).
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Randomization Method
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Before
For the first trial, a list of the population of tax payers registered to pay SWT and GST was provided by the tax authority. Tax payers were randomly assigned to Treatment Group A, Treatment Group B and to the Control Group using STATA.
For the second trial, a list of the population of tax payers who missed the deadline for lodging taxes in the previous month were randomly divided based upon whether the last digit of their tax identification number is an odd or even number.
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After
For the SMS trial, de-identified baseline data were provided by the IRC for the population of taxpayers registered to pay Salary and Wages Tax (SWT) and Goods and Services Tax (GST). The baseline data were used for stratified randomization. A list of variables that was used to stratify is provided in Appendix B of the pre-analysis plan. Randomization was done in Stata using the command -randtreat- (version 1.4, 5 April 2017) using a random seed.
For the flyer trial, the population of taxpayers who missed the deadline for lodging taxes in the previous month is randomly divided based upon whether the last digit of their Tax Identification Number (TIN) is an odd or even number. Within this population, taxpayers with a TIN that is an odd number are assigned to receive a flyer in addition to the letter.
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Planned Number of Observations
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Before
In the first trial, there are around 25,000 tax payers.
In the second trial, it is expected there will be around 3,000 to 4,000 tax payers.
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For the SMS trial, there are up to 23,489 taxpayers. For the flyer trial, it is expected there will be around 3,000-4,000 taxpayers.
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Sample size (or number of clusters) by treatment arms
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Before
In the first trial, there are around 8,000 tax payers in each group.
In the second trial, there will be around 1,500 to 2,000 tax payers.
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After
For the SMS trial, there are around 8,000 taxpayers in each group. For the flyer trial, there will be around 1,500-2,000 taxpayers in each group.
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Additional Keyword(s)
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Public Finance
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Tax Compliance, Natural Field Experiment, Behavioral Insights
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