Applying behavioural insights for Tax Compliance – Behaviourally informing SMS messages to increase the Sale Tax compliance

Last registered on June 21, 2022

Pre-Trial

General Information

Title

RCT ID

AEARCTR-0009612

Initial registration date

June 20, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

June 21, 2022, 11:04 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name

Fadi Makki

Affiliation

B4Development Foundation

Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status

In development

Start date

2022-06-20

End date

2023-03-31

Keywords

Behavior, Finance & Microfinance

Additional Keywords

tax compliance

JEL code(s)

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

The focus is on raising tax morale and willingness to pay among registered taxpayers for Sales Tax on Services (STS) using SMS messages that are sent out to the community on a monthly basis. As a part of the tax authority's existing SMS initiative – a reminder message is sent to the registered tax payers two days before the deadline each month reminding them of their obligation to file their tax. Any filers who have not filed by then are sent a warning SMS message regarding their failure to file. The experiment aims at behaviorally informing the existing SMS’s being utilized by the tax authority and conduct a study to understand the impact of the Reminder and Warning SMS messages on tax compliance and evaluate and recommend the most effective SMS intervention to increase sales tax compliance.

External Link(s)

Registration Citation

Citation

Makki, Fadi. 2022. "Applying behavioural insights for Tax Compliance – Behaviourally informing SMS messages to increase the Sale Tax compliance." AEA RCT Registry. June 21. https://doi.org/10.1257/rct.9612

Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)

Registered tax payers will receive 2 different types of behaviorally informed reminder messages and ones that have not filed on time will receive one of the two additional warning messages which too are behaviorally informed.

Intervention Start Date

2022-06-20

Intervention End Date

2022-11-30

Primary Outcomes

Primary Outcomes (end points)

The analysis will be done on multiple levels –
1) Timely Filing rates
2) Late filing rates
3) Changes in filing rates in subsequent months.
Additional analysis points will include studying the filing rates while controlling for region, sector, corporate or non-corporate status of entity and accounting for how long each entity has been registered with the tax authority.
Results will be utilized to establish the most effective intervention condition to be utilized by the tax authority to ensure increased compliance rates within the province.

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

The experimental design is focused on utilizing a factorial design for implementation. A total of 10 experimental conditions were established after the literature review and secondary research. The BI approaches chosen were:
For Reminder Messages
1) Equivalent Reciprocity – Responding to positive actions with equivalent ones
2) Loss Aversion - Tendency to prefer avoiding losses
For Warning Messages
1) Loss Aversion – Tendency to prefer avoiding losses
2) Active Choice - Moving individuals to affirmatively choose and make implicit choices

Along with the baseline (control) messages – a 3x3 factorial setup is established with the addition of two intervention conditions. A ‘No SMS’ condition was also included alongside each SMS message combination to establish 10 intervention conditions

Experimental Design Details

Not available

Randomization Method

Randomization done in office by a computer in excel

Randomization Unit

Taxpayer level

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

16 700 taxpayers (the entire population)

Sample size: planned number of observations

16 700 time 6 - binary outcome, filed on time/didn't file on time for the period of 6 months

Sample size (or number of clusters) by treatment arms

1670

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Supporting Documents and Materials

IRB

Institutional Review Boards (IRBs)

IRB Name

Ethics Review Committee (RERC) from Lahore School of Economics

IRB Approval Date

2022-06-20

IRB Approval Number

RERC-062022-02

Analysis Plan