To file or not to file? Another dimension of tax compliance – the Eswatini Taxpayers’ survey

Authors: Fabrizio Santoro
Publisher: Journal of Behavioral and Experimental Economics
Date: October 2021

Abstract:

Volume 95

Non-filing, the failure to submit a tax declaration, is a widespread phenomenon in sub-Saharan Africa and produces detrimental fiscal effects, from impaired revenue mobilisation to inequality.

Non-filing has been largely unexplored in the public finance literature, which focusses mostly on active filers. This paper sheds light on the determinants of non-filing, building on neoclassical and behavioural theories, and adds to the methodological discussion on how to measure tax compliance.

Focusing on Eswatini, I combine survey data from one thousand entrepreneurs with their tax returns over 2013–2018. I show that economic deterrence, compliance costs and moral factors, such as intrinsic motivation and peer pressure, correlates with filing.

I also study how results change when using a self-reported measure of compliance. In terms of policy, results show that the tax authority could improve filing rates by balancing a deterrent and a service-oriented approach, and also by triggering the role of social norms.