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Projects and activities | 16 September 2020

Increasing tax compliance by making tax declarations public

Context

For governments, collecting taxes is essential for financing publicly provided goods and services. Despite this, some people tend to dodge taxes. Citizens who do pay their taxes may feel that tax evasion is unfair and may therefore help tax authorities to identify tax evaders.

In some Nordic countries, everyone has access to the tax declarations of everyone else. The effects of such public disclosure of tax declarations are difficult to assess. It could be that such transparency allows citizens to assess whether taxpayers' declarations match their apparent wealth.

Goals

The project aims to assess the effect of making tax declarations publicly available on taxpayers' behaviour. Specifically, we aim to test whether such a policy:

  1. increases the likelihood that 'honest' taxpayers will anonymously denounce tax evaders (also known as ‘free-riders’)

  2. leads to higher tax compliance.

We also aim to test whether these effects depend on whether the public disclosure of tax declarations is mandatory or voluntary.

Methods

We are conducting a laboratory experiment to test these hypotheses.

Expected outcomes

The results from this project are expected to help governments decide whether to implement public disclosure of tax declarations.
Preliminary findings suggest that publicly disclosing tax declarations has a positive effect on tax compliance.

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