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The Effects of Penalty Information on Tax Compliance: Evidence from a New Zealand Field Experiment

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dc.contributor.author Gemmell, Norman
dc.contributor.author Ratto, Marisa
dc.date.accessioned 2017-12-06T22:22:31Z
dc.date.accessioned 2022-07-11T21:36:30Z
dc.date.available 2017-12-06T22:22:31Z
dc.date.available 2022-07-11T21:36:30Z
dc.date.copyright 2017
dc.date.issued 2017
dc.identifier.uri https://ir.wgtn.ac.nz/handle/123456789/20293
dc.description.abstract The ‘standard’ Allingham-Sandmo-Yitzhaki (ASY) model of tax evasion predicts effects on compliance which depend on the perceived probability of detection, tax rate and penalty for evasion. Compliance effects of detection probabilities and tax rates have been extensively tested empirically, but penalty effects are rarely tested explicitly. This paper examines the effects of late payment penalties on tax compliance based on an experiment involving New Zealand goods and service tax (GST) ‘late payers’. Firstly, based on an ASY-type model of tax late payments in which the probability of enforcement, rather than detection, is central, we develop a number of testable hypotheses. Secondly, based on a field experiment involving a specific compliance intervention, we examine how taxpayers respond when given different penalty information. The experiment also allows us to consider differences between taxpayers’ stated intentions to comply and subsequently observed compliance. Results suggest that differences in penalty information given to taxpayers and reductions in penalty rates both affect taxpayers stated intentions to comply (pay overdue tax and penalties) as predicted. However, subsequently observed responses generally appear unresponsive to penalties. Nevertheless, various individual taxpayer characteristics are identifiable that affect both compliance intentions and actual behaviour. en_NZ
dc.format pdf en_NZ
dc.language.iso en_NZ
dc.publisher Te Herenga Waka—Victoria University of Wellington en_NZ
dc.relation.ispartofseries Working Papers in Public Finance ; 03/2017 en_NZ
dc.subject Tax evasion en_NZ
dc.subject Late payment penalties en_NZ
dc.subject Tax experiment en_NZ
dc.subject Goods and service tax en_NZ
dc.title The Effects of Penalty Information on Tax Compliance: Evidence from a New Zealand Field Experiment en_NZ
dc.type Text en_NZ
vuwschema.contributor.unit School of Accounting and Commercial Law en_NZ
vuwschema.subject.anzsrcfor 140215 Public Economics - Taxation and Revenue en_NZ
vuwschema.type.vuw Working or Occasional Paper en_NZ
vuwschema.subject.anzsrcforV2 380115 Public economics - taxation and revenue en_NZ
dc.rights.rightsholder www.victoria.ac.nz/sacl/about/cpf en_NZ

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