FWD: RE: Don't Forget to Pay your Taxes. Reminders and Compliance in Venezuela

• In Event: Bureaucrats and Identity Bias

Abstract

One of the biggest challenges in developing countries is to reduce tax evasion. The problem is worse in rentier states that face economic turmoil, like Venezuela nowadays. We conduct a randomized controlled trial in Venezuela's capital, Caracas, to assess the effectiveness of different email messages sent by the tax authority to debtors of the property tax. We compare three types of messages: a deterrence communication that underscores the legal consequences of evading; a cost-of-compliance message that underscores the easiness of paying; and a baseline message that simply reminds taxpayers about their obligation. Compared to the control group, the three messages have positive effects on compliance, but the deterrence treatment is more effective than the other two. However, heterogeneous effects are found across types of debtors, as firms respond more to the cost-of-compliance message, while the deterrence email has more impact on natural persons

Author

• Jorge Gallego, Universidad del Rosario