Intervention (Hidden)
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. This customer journey of taxpayers through the website is included in Annex B.
Control
This group will see the original CAPTCHA used on the Declaraguate website. This CAPTCHA will also continue to be used for all other tax forms on the Declaraguate website whilst the trial is running. Figure 1 below shows a translated version of this CAPTCHA.
Figure 1: Control CAPTCHA
The treatment arms all consist of messages and options which are entered directly above the ‘fill form’ button which the taxpayer must press to continue to the next form. Some of the treatment CAPTCHAs involve specific actions that the taxpayer has to complete before they are able to press the ‘fill form’ button, these are described further below.
(T1) Honesty Declaration
This CAPTCHA includes an honesty declaration which translates as:
‘Declaration: I will fill out this form honestly
Please sign your name to confirm this declaration’
The taxpayer must then enter their name in a box below this statement before being able to press the ‘fill form’ button .
This CAPTCHA is based around the idea that most people see themselves as honest and act according to the ethical codes of society, however need reminders that these ethical codes should apply to all their decision making. For instance, research has found that people are more honest when they are asked to recall the Ten Commandments just before making ethical decisions (Mazar et al 2008).
Specifically in the context of filing forms, Shu et al (2012), show that moving an honesty declaration to the start of a car insurance form increases truthful reporting of mileage driven each year. The intervention was simple but very successful: while traditionally people would fill out their annual insurance form and then sign their name at the bottom of the form, researchers moved both the honesty declaration and signature box to the top of the insurance form before they would fill it out. The intervention increased the amount of miles declared by 10%.
The ‘honesty declaration CAPTCHA’ applies the same considerations to tax declarations. We hypothesise that when participants sign their full name below an honest declaration, teir moral code is made more salient and hence they will be more likely to comply with it.
(T2) Public Good
This CAPTCHA involves an image of the Guatemalan flag and the following public goods message:
‘In 2013 your taxes helped pay for schools, hospitals and policemen.’
This CAPTCHA draws on the ‘non-deterrence’ approach to taxation; that citizens are fundamentally predisposed to cooperate with tax authorities. The approach contends that taxpayers’ decisions are not based on utility maximisation alone, but are influenced by morality, social norms, and public goods, amongst other concepts (Andreoni et al. 1998, Kirchler, 2007, Erard and Feinstein, 1994, Torgler, 2007). In this view, the relationship between tax authority and taxpayer is basically cooperative, with the latter asking “what should I do?” rather than “what can I get away with?” (McGraw and Scholz, 1991).
In terms of administrative policy, the non-deterrence approach recommends that taxpayers are treated fairly and respectfully. They should be provided with clear and helpful information in order to make decisions. The authority should create a helpful service that makes it easy to comply. The route to reducing non-compliance is to persuade taxpayers by emphasizing that tax compliance is an ethical activity that is practised by the great majority of people, and that it creates valued public goods (Kirchler, 2007). Following from this the CAPTCHA is designed to prime taxpayers to think about the public goods that tax money is spent on. We hypothesise that people who consider the benefits of their own contribution will weigh this more heavily, relative to their own private consumption, than they would do otherwise, and so will be more likely to make an honest declaration.
(T3) Enforcement
This CAPTCHA involves an image of a gavel and the following text:
‘5,060 taxpayers in early 2014 had legal proceedings for breach of their tax obligations.’
This CAPTCHA is based on the idea that signals of punishment enforcement can be a powerful deterrence against unlawful actions (Fehr & Gächter 2000). Knowledge that others have been caught for a crime can lead people to overestimate the likelihood that could be the next to be caught. (Tversky & Kahneman 1979)
Enforcement messages to increase taxation are based on the original economic model used to analyse tax compliance developed by Allingham and Sandmo (1972). The model sees taxpayers as rational utility maximisers and suggests that a taxpayer’s decision whether to pay or evade tax is based on the trade-off between the monetary cost of complying and the expected cost of evading. The expected cost of evading is in turn based on the probability of getting caught, the probability of punishment if caught, and the punishment that they would be liable for. Accordingly, this “deterrence” model predicts that the way to deter tax evasion is through increased sanctions for noncompliance.
The enforcement CAPTCHA draws on making enforcement more salient to the taxpayer. Similarly to the above, our hypothesis is that information on potential costs makes these costs more salient and so adjusts relative weights of private consumption and taxpaying for the participant. Enforcement messages on tax letters have been shown to be effective in a number of countries including Argentina and Venezuela (Castro and Scartascini, 2013; Ortega and Sanguinetti, 2013).
(T4) Choice Public Good
This CAPTCHA gives the taxpayer a choice of public goods that they would like to see tax money spent on. The text of the CAPTCHA reads:
‘Please choose what you want us to direct your tax money to:’
The taxpayer is then given the choice of selecting schools, hospitals, or policemen.
The design of this CAPTCHA incorporates a choice design with a public goods message. Research shows that people like to have a say in the design of a product or policy. This has been dubbed the ‘IKEA effect’ because people value their own creations (like assembling an IKEA cupboard or providing input into policy) higher than that of others (Norton et al 2011). It can thus be effective to allow people to give input towards which cause they think that their tax money should go.
This CAPTCHA intervention aims to prime the taxpayer into thinking about the public goods that tax goes towards, giving them the option to voice their preference. Our hypothesis is that even a cursory sense of control over public spending provides a sense of ownership and hence lead to taxpaying being more highly valued. The number of choices is limited to three in order to avoid potential cognitive exhaustion before filling out the form (Vohs et al 2008).
(T5) Choice Enforcement
This CAPTCHA gives the taxpayer a choice of the punishment that they think people should receive for fraudulently declaring their tax.
‘Please tell us what you think should happen to people who fill out their forms dishonestly’
The taxpayer is then given the choice of selecting; pay a fine, confiscate your assets, or go to jail.
This design is based on the same premise as above but incorporates punishment choices rather than public good choices. This CAPTCHA aims to prime the taxpayer into thinking about what should happen to people that don’t pay their tax honestly.
The message also aims to invoke cognitive dissonance in taxpayers that would have filled out the form dishonestly. We hypothesise that participants will suffer from cognitive dissonance due to the clash between their beliefs that dishonest declarers should be punished, and their dishonest actions. Under this hypothesis, participants would seek to resolve this dissonance by bringing their actions in line with their beliefs.
(T6) Self Select ‘I am honest’
This CAPTCHA allows the taxpayer to self-select into being honest. The CAPTCHA reads:
Which of the following do you identify with?
The taxpayer then has to select one of the following two options;
- I am an honest taxpayer who declares truthfully
- I'm a busy taxpayer declares quickly