Collaboration between The Norwegian Tax Administration and academia - to the benefit of both - Research and raised awareness on tax issues and increased compliance Barcelona 23.October 2017
Outline The Norwegian Tax Administration (NTA) 2025 Challenges and strategies where collaboration with academia is essential Why and with whom are we collaborating? The Norwegian Centre for Taxation at the Norwegian School of Economics Other institutions How do we collaborate? Some examples Collaboration about taxpayer behaviour An example A field experiment
The Norwegian Tax Administration 2025 Challenges and strategies where collaboration with academia is essential
Our challenges and strategies A stable, costeffective and efficient production Simplifications for small businesses Prepare for an improved ID-administration Reduce labour crime Ensure taxes from international transactions
Our challenges and strategies A stable, costeffective and efficient production Simplifications for small businesses Prepare for an improved ID-administration Reduce labour crime Ensure taxes from international transactions
Why and with whom are we collaborating? The Norwegian Centre for Taxation (NoCeT) at the Norwegian School of Economics (NHH) Other institutions
Why? Collaboration to the benefit of both Benefits for the government and NTA Neutral experts Knowledge and raised awareness Experts who can contribute in public policymaking Benefits for academia Access to high quality data Funding Interesting research questions for master and PhD students
The Norwegian Centre for Taxation (NoCeT) Established in 2012 at the Norwegian School of Economics (NHH) Co-funded by the Research Council of Norway and The Norwegian Tax Administration Provides high quality research and education in all aspects of taxation and public finance Does research on Capital taxation in an open economy Law and economics Behavioral economics and compliance Has been instrumental in work by the government and its members serve/ has served on various public policy committees https://www.nhh.no/en/research-centres/nocet/about/
Other institutions Big Insight - Statistics for the knowledge economy A consortium of 15 partners (7 private, 4 public and 4 research) Statistical methods and machine learning for big data http://biginsight.no/biginsight/drupal/ Oslo Fiscal Studies A centre for public economics based on the collaboration between Departement of Economics at University of Oslo, SSB (Statistics Norway) and the Frisch Centre for Economic Research Skatteforsk at the Norwegian University of Life Sciences
How do we collaborate? Some examples
Collaboration examples Biannual informal meetings between the head/deputy director of NoCeT and NTA Access to data «Tax Evasion and Inequality» Alstadsæter, Johannesen and Zucman, oct 2017, http://gabriel-zucman.eu/files/ajz2017.pdf Workshops to identify areas for collaboration Grants for Master students Increased interest for Tax - NoCet (and the University of Bergen) Increased number of PhD students on tax issues Publicity in media
Collaboration about taxpayer behaviour An example A field experiment
What explains tax evasion? The classical approach to understanding tax evasion Whether an individual evades taxes is determined by the tax rate, the detection probability, the fine and the level of risk aversion (Allingham and Sandmo, JPubEc, 1972). Challenges to the standard model Empirical estimates of tax evasion are hard to reconcile with the standard model, given the low probability of detection in many contexts (Frey and Feld 2002). Survey evidence on tax evasion and a growing literature in behavioral economics suggest that moral concerns matter for people. Source: You ve got mail: A randomized field experiment on tax evation,bott,cappelen,sørensen & Tungodden, NHH FIBE 2014
Important questions How can tax authorities most efficiently fight tax evasion? Do moral considerations matter beyond the lab? This is of general interest for understand human behaviour Source: You ve got mail: A randomized field experiment on tax evation,bott,cappelen,sørensen & Tungodden, NHH FIBE 2014
You ve got mail... A field experiment Conducted by the Choice Lab/ NHH together with NTA A unique data set of more than 15000 taxpayers in Norway Taxpayers who were likely to have underreported their foreign income in the previous tax year (AKU) Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3033775
You ve got mail... A field experiment Randomley assigned individuals to a control group that did not receive a letter or to different treatment groups that received some letters from NTA just before they were to self-report their foreign income Some taxpayers received a «base letter» that only contained information on why and how to report foreign income, while others received a «moral letter» or a «detection letter» Studied the effect on self-reported foreign income in the following tax return Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3033775
Letters ready for mailing
You ve got mail... Main results The researchers find that the inclusion of a moral appeal or a sentence that increases the perceived probability of detection in a letter from the Norwegian Tax Administration almost doubled the average self-reported foreign income They also show that the detection letter has large long-term effects on tax compliance You will find the paper here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3033775
You ve got mail... Main results And you can also read about the field experiment in Harvard Business Review https://hbr.org/2017/07/research-moralappeals-can-help-reduce-tax-evasion
Collaboration needed for years to come External change puts pressure on existing tax systems Tighter budgets More for less - From effective to efficient This means Continued need for knowledge Research to promote innovation Research as an important source for concrete changes
Academia help us meet our challenges and to ensure a tax system of high legitimacy in Norway
Thank you mette.myrmell@skatteetaten.no