Due to their more long-term effects, however, boosts might not be as readily cost-effective as several choice-specific nudge interventions.
Also, as indicated above, where there is really major sludge, even educated people may not learn enough to help much. Having said that, boosting should still improve economic education and therefore foster tax morale, at least to some extent.
The effects of boosts might thus extend well beyond the effects of nudges.
Boosting fiscal literacy might have the additional benefit of facilitating electoral voting decisions that align more closely with individual preferences and thus result in tax systems that more closely reflect people’s true preferences rather than, for instance, the efforts of lobbying groups.
In sum, boosts may increase willingness to pay taxes outside the narrow decision framework that is affected by nudges. They also have the potential to improve compliance by reducing sludge, or at least its impact.
No silver bullet
Neither nudges nor boosts nor sludge should be expected by themselves to close the compliance gap. Instead, it is important to remember that taxpayers’ compliance decisions are made within an institutional framework, and policy reform should first and foremost aim to establish effective, transparent, and fair tax systems.
This includes the use of tax audits to ensure that taxpayers who are deemed to have a high propensity for cheating pay their fair share.
However, there is clearly a long way to go for many countries, especially in terms of transparency and perceived or actual fairness.
Additionally, the inherently negative attitudes of some people towards paying taxes are difficult to change. Some of this negativity is understandable considering the complexities that some taxpayers face.
The central argument of this current research project is that behavioural interventions can and should be utilised in the design of tax policies and the work of tax administrations.
For example, policymakers and tax administrations need to work towards simplifying the tax system and more effectively highlight the social benefits enabled through taxes.
These approaches undoubtedly constitute valuable additions to the toolbox of measures that tax administrations employ to build better tax systems and promote tax compliance.
However, for the methods to effectively complement traditional deterrence approaches, tax administrations should evaluate them carefully and skilfully before their implementation.
Furthermore, to effectively convert these insights into practice, tax administrations must be open to partnering with researchers and other individuals or bodies with relevant insights and knowledge, so as to systematically evaluate the potential of novel behavioural approaches for increasing tax compliance.
Closer co-operation between tax administrators and all relevant stakeholders should thus be facilitated and encouraged.
