How to improve tax compliance? Evidence from population-wide experiments in Belgium

We study the impact of simplification, deterrence and tax morale on tax compliance. We ran four natural field experiments varying the communication of the tax administration with the universe of income taxpayers in Belgium throughout the tax process. A consistent picture emerges across experiments: (i) simplifying communi- cation substantially increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective, and often backfires. A discon- tinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. We find that simpli- fication is far more cost-effective, allowing for substantial savings on enforcement costs.