View full metadata record

dc.titleCompliance Spillovers across Taxes: The Role of Penalties and Detection
dc.contributor.authorLópez-Luzuriaga, Andrea
dc.contributor.authorScartascini, Carlos
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageArgentina
dc.date.available2018-11-16T00:00:00
dc.date.issue2018-11-16T00:00:00
dc.description.abstractWhat happens when the tax authority increases enforcement in one tax with compliance in other taxes? The very little evidence available is not conclusive. This paper presents a very simple analytical model that shows the conditions under which spillovers could be positive or negative in the context of uncorrelated taxes for the same individual (a property tax and a self-declaration tax—in this instance, a gross-sale tax). In the model, the sign of the spillover depends on how taxpayers update their beliefs on penalty and detection probabilities for one tax after watching the deterrence actions the tax agency took on another tax. Results from a randomized field experiment show no evidence of negative spillovers: increasing the salience of fines and enforcement probabilities for those who do not comply with the payment of the property tax does not decrease how much the same individual declares on the gross-sale tax. The result has ample implications for researchers bringing interventions to the field and for governments’ enforcement strategies. Given that most taxpayers are liable for more than one tax, neither researchers nor authorities can continue to neglect potential spillovers of interventions. Instead, they should design enforcement strategies that maximize compliance across the portfolio of taxes. Importantly, this work indicates that penalties and detection may not be perfect substitutes when the portfolio is taken into consideration.
dc.format.extent41
dc.identifier.doihttp://dx.doi.org/10.18235/0001414
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Compliance-Spillovers-across-Taxes-The-Role-of-Penalties-and-Detection.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectProperty Tax
dc.subjectAuditing
dc.subjectTax Compliance
dc.subjectMunicipal Government
dc.subjectTax Evasion
dc.subjectTax Rate
dc.subjectImpact Evaluation
dc.subjectRandomized Controlled Trial
dc.subject.jelcodeC93 - Field Experiments
dc.subject.jelcodeD03 - Behavioral Microeconomics: Underlying Principles
dc.subject.jelcodeH26 - Tax Evasion and Avoidance
dc.subject.jelcodeH41 - Public Goods
dc.subject.keywordstaxpayer
idb.identifier.pubnumberWorking Papers
idb.operationRG-K1199
Return to Publication