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Using CAPTCHA and honesty primes to increase tax collection in Guatemala
Last registered on June 30, 2014

Pre-Trial

Trial Information
General Information
Title
Using CAPTCHA and honesty primes to increase tax collection in Guatemala
RCT ID
AEARCTR-0000424
Initial registration date
June 30, 2014
Last updated
June 30, 2014 12:58 PM EDT
Location(s)
Region
Primary Investigator
Affiliation
Behavioural Insights Team
Other Primary Investigator(s)
PI Affiliation
Behavioural Insights Team & University of Bristol
Additional Trial Information
Status
In development
Start date
2014-07-27
End date
2015-03-31
Secondary IDs
TP4014019
Abstract
This trial involves prompting and priming honesty among Guatemalan taxpayers filing declarations for income tax (ISR) or value added tax (IVA). Messages designed to induce more honest declarations are included as part of a series of CAPTCHA security systems which participants must complete in order to complete their declaration forms for these taxes.
The primary objective of the trial is to increase honesty in tax declaration. Following previous research in this area, we argue that more honest declarations will typically be report a higher tax liability than dishonest ones. The trial is important as Guatemala has the lowest rate of tax collection in Latin America (OECD, 2014).
The trial involves all people eligible to pay at least one of four taxes who complete a tax return online between July and November 2014 (approximately 1,600,000 individuals), who will be randomly allocated to either see one of six honesty prompts, or be part of a control group. Unlike other studies of tax compliance, this study targets people who are in the process of declaring their tax, rather than late or non-payers.
The intervention is delivered at the point of accessing an online declaration form. Participants are required to complete a CAPTCHA (Completely Automated Public Turing test to tell Computers and Humans Apart) that verifies that they are a human being completing the form rather than an automated process. Our interventions consist of a series of messages inserted into the CAPTCHA pop-up.
The trial aims to test the differential impact of the original CAPTCHA (which contains no behavioural prompts), and various prompts inspired by behavioural science. These include an honesty declaration, information about public goods paid for by taxes and punishment for noncompliance, and allowing participants to choose what they believe to be a good use for public funds, or an appropriate punishment. We hypothesise that these primes will induce more honest (higher) tax declarations through various cognitive channels.
External Link(s)
Registration Citation
Citation
Kettle, Stewart and Michael Sanders. 2014. "Using CAPTCHA and honesty primes to increase tax collection in Guatemala." AEA RCT Registry. June 30. https://doi.org/10.1257/rct.424-1.0.
Former Citation
Kettle, Stewart and Michael Sanders. 2014. "Using CAPTCHA and honesty primes to increase tax collection in Guatemala." AEA RCT Registry. June 30. https://www.socialscienceregistry.org/trials/424/history/2005.
Experimental Details
Interventions
Intervention(s)
The trial involves seven arms; a control arm where taxpayers receive the original CAPTCHA, and six adapted versions. The original Spanish versions of the treatment CAPTCHAs are included in appendix A. The CAPTCHA appears after the taxpayer selects the tax form to fill in on the main Declaraguate website, and before the form page.
Intervention Start Date
2014-07-27
Intervention End Date
2014-12-05
Primary Outcomes
Primary Outcomes (end points)
The objective of this trial can be framed in one of two ways – to increase tax revenues in Guatemala, and to encourage more honesty in the declaration of tax liabilities.
For the purposes of this trial we take the two measures to be equivalent. Following Shu et al (2012), we assume that if a participant is reporting their tax liability dishonestly (as opposed to making an error), they will systematically understate their liability relative to the truth. We further assume that misreporting through error is statistically similar to classical measurement error, and so is randomly distributed around the true value according to some unknown distribution. For the purposes of our power calculations, we assume that this error is (a) classical (b) orthogonal on treatment, and (c) does not interact with treatment – i.e. that the measurement error does not effect treatment. If (a) does not hold, we may experience a loss of power, and any treatment effect detected would be a lower bound on the true effect size; (b) holds by design of the trial, and the validity of (c) is irrelevant if (b) holds.
Hence, total tax liability declared is our primary outcome measure.
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
We adopt a randomised controlled trial design with parallel conditions and individual level randomisation. Participants (Guatemalans declaring their tax liability), will be randomly assigned to see one of 7 CAPTCHAs (control or one of the six treatment arms) after selecting the tax form to fill in on the main Declaraguate website, and before the form page.
This trial will be conducted over the course of 4 months. There are four types of tax included in this trial described below . The trial involves approximately 4% of Guatemalans, and all Guatemalans who declare online for these four tax regimes. For income tax and VAT general this is 100% of declarations as online declaration is mandatory for these tax regimes, for VAT small taxpayers approximately 90% of declarations are made online.
Experimental Design Details
We adopt a randomised controlled trial design with parallel conditions and individual level randomisation. Participants (Guatemalans declaring their tax liability), will be randomly assigned to see one of 7 CAPTCHAs (control or one of the six treatment arms) after selecting the tax form to fill in on the main Declaraguate website, and before the form page. This trial will be conducted over the course of 4 months. There are four types of tax included in this trial described below . The trial involves approximately 4% of Guatemalans, and all Guatemalans who declare online for these four tax regimes. For income tax and VAT general this is 100% of declarations as online declaration is mandatory for these tax regimes, for VAT small taxpayers approximately 90% of declarations are made online. It is reasonable to assume that our interventions may have differing effects for taxpayers declaring for the four different regimes. For this reason we produce separate results for each type of tax in our trial. This will be described in more detail later in this protocol. As well as our primary analytical objectives (determining whether more tax has been paid), we aim to gain insights into the behavioural mechanisms in action and to identify the medium-term effects of messaging (over the course of the four months of the trial). We note that choices of tax are fixed within the period of the trial, and so although these are endogenous they do not interfere with our analysis. Income Tax Guatemalan income tax is charged in one of two ways, selected by the taxpayer. The two taxes are paid differently (using different forms), and we are considering both in this trial. Regime over profits from lucrative activities Taxpayers can choose to pay income tax in this way. This is charged at a rate of 28% on non-deductible income. Deductions include income from capital. This tax must be paid every 3 months, with returns filed within ten days of the end of the quarter. Simplified optional regime over income from lucrative activities Participants in this scheme pay 7% of their annual income in taxation (from April 2014). Participants in this tax regime must make monthly tax returns not later than the 10th of the subsequent month, and an aggregated return to be completed annually. There are good reasons to expect different treatment effects depending on the tax being declared. The regime over profits from lucrative activities is charged at a higher rate, and so the incentive to behave dishonestly may be higher. Individuals and businesses that complete this kind of return may however be more affluent, which in turn could reduce their incentive to be dishonest due to a lower marginal value of money Finally, the simplified option is, as its name implies, less complex a form. This may lead to greater honesty as there are fewer dimensions across which it is possible to obfuscate tax liability. Value Added Tax (VAT) Two regimes exist for Value Added Tax (VAT) payments in Guatemala. VAT is levied at 12% for taxpayers under the general regime (with annual turnover of more than GTQ 150,000), and 5% for taxpayers in the small taxpayers regime (with annual turnover of less than GTQ 150,000) . VAT is charged on sales of goods within the country, sale of services in the country, any imported goods, leasing contracts, transfers of real estate, and insurance and bond sales. Exports, banking activities, payments in-kind, mergers, trade in financial instruments, and trust arrangements are exempt from VAT. We consider taxpayers under both regimes. Similar to income tax we have reason to expect differential treatment impacts for taxpayers under the two VAT regimes.
Randomization Method
Randomised by javascript randomisation code
Randomization Unit
Individual
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
1,600,000
Sample size: planned number of observations
1,600,000
Sample size (or number of clusters) by treatment arms
Approximately 240,000
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Based on our calculations, a 7 arm trial will be powered to detect a rise in tax liability declared of 1% with approximately 1,687,000 observations. This is a very conservative effect size, and could be detected with roughly 4 months of data for this tax type. We will therefore run the trial for 4 months. Power may be reduced due to a lack of strict independence between observations.
Supporting Documents and Materials

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IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Behavioural Insights Team Internal Review
IRB Approval Date
2014-06-30
IRB Approval Number
EC2014019
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers