Influencing Taxpayers Behavior
This webinar was delivered as part of the Tax Policy and Administration Learning Program primarily supported by the Dutch Ministry of Finance, Center of Excellence in Finance (CEF), and International Monetary Fund (IMF). The overall objective of the program is to contribute to strengthening of beneficiary institutions’ capacity in implementing the EU recommendations under which the revenue authorities can deliver tax compliance risk management.
ABOUT THIS LEARNING EVENT
Taking into account the evolving dynamics of learning that the online environment is offering, we were pleased to engage with tax officials across South East Europe (SEE) and broader also by complementing our face-to-face knowledge exchange events with a series of webinars on selected topics.
This webinar looked into how tax authorities across SEE can overcome the challenges related to obtaining compliance in an efficient way with limited resources to collect the full amount legally due by exploring the effects of applying behavioral research findings to influence taxpayers to declare and pay their liabilities.
What participants learned
The need for tax administrations to understand compliance behavior remains as important as ever. There is a growing body of literature and research findings that show how better understanding of the motives of taxpayers and their attitudes and behavior towards taxation can improve both voluntary compliance and the efficiency of the tax administration.
Apart from better understanding of how taxpayers make decisions, findings from behavioral economics can also help tax authorities make informed choices about risk treatment strategies they will employ to promote compliance – an important issue to consider is whether tax authorities have at their disposal the range of methods they need to prevent certain behaviors and what the outcomes of different types of used methods are likely to be observed as a result of such interventions. Embedding of the respective research findings to the taxation context, may also help tax authorities test different approaches how they can communicate and intervene with taxpayers. With regards to the later, several randomized controlled trials researches have been using to study the level of tax compliance confirm that when tax authorities send out letters to taxpayers to remind them about their liabilities, the best performing treatments are those with a deterrent message framing non-declaration as an intentional and deliberate choice, and a social norms message that refers to the majority of taxpayers that had already paid their tax obligations. These findings can have for example important implications for tax authorities when they are designing their taxpayer’s service programs.
The webinar was an opportunity for representatives of the SEE tax administrations to explore psychological aspects of tax compliance and exchange their experiences and views in using behavioral research to influence taxpayers’ behavior. It discussed ways tax authorities can use the latest research findings on range of taxpayers’ behavioral patterns, social circumstances and drivers and translate them into action to achieve desired effects.
How participants benefited
This learning initiative applied participatory learning design, combining subject matter presentations with answer and question session built in to ensure active engagement of the webinar attendees and to optimize learning outcomes.
The aim of the webinar was to open a discussion on the latest findings from behavioral economics and how they can be used to provide insights into increasing tax compliance. In particular by the end of the webinar, participants:
- learned about the factors (such as deterrence, personal and social norms, fairness and trust, simplicity vs. complexity, broader economic, political and social issues, etc.) that influence taxpayer compliance behavior
- discussed why understanding and influencing taxpayer behavior matter and why targeted treatments based on behavioral insights may be more efficient
- became familiar with lessons learned from tax administration that have put behavioral insights into practice to prompt compliance
This learning initiative was designed for tax officials who were interested in behavioral economics and its relevance and implications for tax compliance.
- Center of Excellence in Finance and Tax Policy and Administration Learning Program - Dijana Mitrovic, CEF Program Specialist
- IMF priorities in the region - Steffen Normann Hansen, IMF Revenue Administration Advisor
- Economic Psychology of Tax Behavior - Norman Gillanders, CEF Associate Fellow
- Dutch approach - Bert Van den Boorn, Strategic Advisor, International Affairs, Tax and Customs Administration of the Netherlands
- Application of Behavioral Insights model - Deb Milton, Behavioural Insights Lead - Individuals, Australian Taxation Office
- Fiscal Behavior - Alin Cristian Preda, National Agency for Fiscal Administration, Romania
When: May 16, 2017, at 10:00 — 11:30 am CEST
Where: From the convenience of your own computer, tablet or smartphone.
Duration: up to 90 minutes
This webinar was free to join.
Norman Gillanders, CEF Associate Fellow
Norman was head of strategic planning and operations policy in the Irish Revenue service at the level of assistant commissioner. He led the restructuring of the Irish Revenue by designing, setting up and running the first of its new regions and was one of the key managers in the overall restructuring of the organization. He implemented a new business model for managing PAYE (employee payroll taxation) and led the development of the Irish Revenue's compliance strategy. As part of this strategy, the Irish Revenue launched its REAP system for computer-driven risk screening of businesses to improve targeting of compliance interventions.
Norman was the IMF's tax administration reform advisor in South Eastern Europe from 2011 to 2014. He worked on behalf of the IMF with the tax authorities in Albania, Bulgaria, Croatia, Moldova, Montenegro and Romania, and was based at the Center of Excellence in Finance in Ljubljana, Slovenia.
Bert van den Boorn, Ministry of Finance, the Netherlands
Throughout his career, Bert has held numerous positions: he has worked as a tax auditor; team leader of small and medium companies at the NTCA; deputy director in one of the 13 regions of the NTCA; director in the Office for Foreign Tax Payers; and trainer and management consultant. In addition, he has been co-director of the Department of Objection, Complaint and Appeal and co-director of the Department of Inheritance Tax and Gift Tax. Bert has also been city director in Asten and Nuenen.
Bert's interest and education also reaches out to clinical and social psychology and mediation. He has worked as a therapist in a hospital, and as a coach and mediator.
Steffen Normann Hansen, International Monetary Fund
Steffen Normann Hansen is a revenue administration advisor in South East Europe (SEE). He works for the IMF Fiscal Affairs Department and has been based at the CEF since June 2014. He works with colleagues from national tax administrations in the SEE region, helping them develop modern European tax systems, fight against tax evasion and apply a sound risk analysis system. At the CEF, Steffen helps with delivering the Tax Policy and Administration learning program. Before joining the IMF, Steffen was a Danish Customs and Tax Administration official with a wealth of expertise across all tax administration and customs components of revenue administration.
- Swedish Tax Agency: Right from the start
- Erich Kirchler and Ingrid Wahl: Tax Compliance Inventory: TAX-I Voluntary tax compliance, enforced tax compliance, tax avoidance, and tax evasion
- Dr. Liam Delaney PhD.: Irish Policy Reform and Behavioral Economics
- Luigi Mittone, Fabrizio Panebianco, and Alessandro Santoro: The Bomb-Crater Effect of Tax Audits: Beyond Misperception of Chance
- Evidence from a Randomized Tax Audit Experiment in Denmark
- Raymond M. Duch and Hector Solaz: Why we Cheat: Experimental Evidence on Tax Compliance
- Tweeter feed: Behavioral Insights Team @B_I_Tweets
- Tweeter feed: Behavioral Economics @BehavioRRalEcon
This learning initiative was supported by: