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Information about changes in platform economy taxation diminishes optimism regarding future use

Author

Listed:
  • Jantsje M. Mol

    (University of Amsterdam
    Tinbergen Institute)

  • Catherine Molho

    (University of Amsterdam
    VU Amsterdam)

Abstract

Some economic interactions are based on trust, others on monetary incentives or monitoring. In the tax compliance context, the monitoring approach creates compliance based on audits and fines (enforced compliance), in contrast to the trust-based (voluntary compliance) approach, which is based on taxpayers’ willingness to comply. Here, we examine how changes in taxation regarding platform economy revenues affect intended labor supply on such platforms. New EU legislation, effective from 2023, will mandate data sharing between platforms and tax authorities across Europe, thus resulting in increased monitoring. We investigate how this upcoming shift in monitoring power affects the intended use of platforms and how it may interact with users’ trust. We use a survey among platform workers (N = 626) in the Netherlands to examine views of the proposed regulation change, corrected for the proportion of platform income and several measures of trust. We experimentally manipulate information by either informing participants about the upcoming monitoring change or not. Results show that informing respondents about the change negatively affects expected supply of labor, and this effect is independent of respondents’ trust. We discuss the policy implications of these results.

Suggested Citation

  • Jantsje M. Mol & Catherine Molho, 2024. "Information about changes in platform economy taxation diminishes optimism regarding future use," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 10(2), pages 330-345, December.
    • Handle: RePEc:spr:jesaex:v:10:y:2024:i:2:d:10.1007_s40881-024-00160-y
    DOI: 10.1007/s40881-024-00160-y
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    More about this item

    Keywords

    Platform economy; Taxation; Online experiment; Enforced compliance; Voluntary compliance; Trust;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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