The Role of Information in Tax Compliance: Evidence from a Natural Field Experiment

Government Institute for Economic Research Working Papers No. 48

50 Pages Posted: 10 Oct 2013

See all articles by Tuomas Kosonen

Tuomas Kosonen

University of Helsinki - Department of Political and Economic Studies

Olli Tapani Ropponen

Government of the Republic of Finland - VATT Institute for Economic Research; University of Helsinki - Department of Political and Economic Studies

Date Written: September 16, 2013

Abstract

It is challenging to distinguish the role of information in tax compliance from other factors affecting it. This paper utilizes a novel natural field experiment design to study the issue. In the experiment firms reporting their VAT were sent a letter asking them questions about their attitude towards the tax authority. The introductions to the questions provided candid information about VAT rules for a randomized treatment group, while a randomized control group was only asked questions without additional information. We observe the effects of the treatments directly from firm-level tax records. Providing information did reduce the noncompliance in tax reporting, which indicates that there were unintentional errors. The experimental design also allows us to study whether the difficulty and novelty of the tax code plays any role in tax compliance. The results indicate that tax reporting changes when new and easy information is provided.

Keywords: tax compliance, information, field experiment

JEL Classification: C930, H260, H250

Suggested Citation

Kosonen, Tuomas and Ropponen, Olli Tapani, The Role of Information in Tax Compliance: Evidence from a Natural Field Experiment (September 16, 2013). Government Institute for Economic Research Working Papers No. 48, Available at SSRN: https://ssrn.com/abstract=2334059 or http://dx.doi.org/10.2139/ssrn.2334059

Tuomas Kosonen (Contact Author)

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

Olli Tapani Ropponen

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

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