<p>This study investigates whether reducing compliance costs could improve tax compliance. Our focus is on the impact of automatic payment systems on tax evasion, with the aim of providing evidence relevant for minor indirect taxes, such as the vehicle tax, which is collected by regional governments in Italy. To this end, we have designed a laboratory experiment in which subjects play a Tax Evasion Game. Participants receive a fixed endowment and engage in a real-effort task under time pressure, where they can earn additional income but are simultaneously required to pay a tax. Although evasion yields a higher expected payoff than compliance, it carries the risk of a substantial fine if detected. In the treatment condition, we introduce an automatic payment option that enables participants to commit to paying the tax before starting the task. We find that reducing the non-monetary burden of compliance significantly increases tax compliance. Finally, we also elicit risk preferences and show that they do not account for the treatment effect.</p>

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Favouring Tax Compliance Through a Simple Automatic Payment Option: Evidence from a Lab Experiment

  • Domenico Colucci,
  • Patrizia Lattarulo,
  • Damiano Paoli,
  • Maria Grazia Pazienza,
  • Vincenzo Valori

摘要

This study investigates whether reducing compliance costs could improve tax compliance. Our focus is on the impact of automatic payment systems on tax evasion, with the aim of providing evidence relevant for minor indirect taxes, such as the vehicle tax, which is collected by regional governments in Italy. To this end, we have designed a laboratory experiment in which subjects play a Tax Evasion Game. Participants receive a fixed endowment and engage in a real-effort task under time pressure, where they can earn additional income but are simultaneously required to pay a tax. Although evasion yields a higher expected payoff than compliance, it carries the risk of a substantial fine if detected. In the treatment condition, we introduce an automatic payment option that enables participants to commit to paying the tax before starting the task. We find that reducing the non-monetary burden of compliance significantly increases tax compliance. Finally, we also elicit risk preferences and show that they do not account for the treatment effect.