(iPoster) Public Disclosure, Moral Disengagement, and Corporate Tax Compliance in Brazil

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Abstract

Democratic erosion often advances through subtle fiscal practices that weaken accountability and equal treatment before the law. This article investigates how recurring tax amnesties and public disclosure shape corporate tax delinquency in a high-corruption context. In Brazil, firms owe hundreds of billions of dollars in unpaid federal taxes, and large corporations account for a disproportionate share of these arrears. At the same time, tax amnesties have become a recurrent policy instrument, creating expectations of future forgiveness and potentially weakening the deterrent effect of traditional enforcement tools. Governments increasingly experiment with transparency and “shaming” to improve compliance, but existing evidence on the effectiveness of such non-pecuniary sanctions for firms is limited and highly context-dependent.

The article combines insights from research on tax morale, social norms, and moral disengagement to examine when and for whom public disclosure can change corporate behavior. It draws on administrative data and a large-scale field experiment implemented with the Brazilian Ministry of Finance, in which roughly 30,000 delinquent firms per wave are randomly assigned to receive different collection letters that vary between reminders and simplification, pecuniary threats (lawsuit and asset seizure), and non-pecuniary threats of shaming (inclusion on a public list of tax debtors), as well as messages that explicitly target mechanisms of moral disengagement. The main outcome is whether firms pay or renegotiate their outstanding debts within 30 days.

The study tests whether recurring amnesties and entrenched moral disengagement blunt the effectiveness of transparency and shaming, especially among large firms and repeat amnesty participants, and whether carefully designed messages can partially restore compliance. By linking disclosure rules, psychological mechanisms, and patterns of strategic tax delinquency, the article illuminates a micro-level channel through which fiscal opacity undermines democratic accountability, and how redesigned transparency policies can help protect and rebuild it.

Author

• Natalia Rodrigues, Harvard Kennedy School