Income Tax Payers Are Not All the Same: A Behavioral Letter Experiment in Eswatini

Very little is known about why taxpayers in sub-Saharan Africa pay their taxes. This article reports results from a nationwide randomized controlled trial in Eswatini, nudging more than 20,000 income tax payers with behaviorally informed mailings, building on deterrence, facilitation, and trust paradigms. This study is the first to target three different categories of taxpayers at the same time—nonfilers, nil-filers, and active filers—and targets both companies and individual taxpayers. Most of the literature focuses on active filers. The results show that nudging is very effective with nonfilers, especially when controlling for actual collection of the letter—any mailing increases the probability of filing by 1.7 percentage points, or 20% of the control group mean. Deterrence is particularly effective for nonfiling companies—increasing filing by 3.9 percentage points—whereas individuals react more to an instructional nudge. Conversely, nil-filers do not respond to a nudge. A trust-based mailing had the opposite of the intended effect with active taxpayers, but they are less likely to nil-file when nudged.