Oxford Professor talks to the European Commission today to discuss changes to taxpayer compliance

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Jan-Emmanuel De Neve, Saïd Business School, University of Oxford, is to talk at tax compliance meeting in Italy today, to promote a new and engaging way for individuals to allocate their tax

This is an almost zero-cost proposal that has the potential to increase the number of individuals declaring and paying all the tax they owe

For immediate release: 24 September 2015

Press release

Academics advise asking taxpayers how they’d like their taxes to be spent

Saïd Business School, University of Oxford

Taxpayers could be given the opportunity to say how they’d like their taxes to be spent if a proposed experiment aimed at increasing tax compliance goes ahead.

Academics Jan‐Emmanuel De Neve, Saïd Business School, University of Oxford, Cait Lamberton, University of Pittsburgh, and Michael Norton, Harvard Business School, are putting their ideas to European national tax authorities at a tax compliance meeting in Italy on 24 September 2015. They are already in discussion with HMRC and the tax authorities in Belgium and Norway about conducting trials in those countries.

The plan is that individuals going online to complete their self-assessment tax returns would be presented with an interactive pie chart right at the beginning of the process. The chart would be pre‐set to show current tax expenditures, but tax-payers could alter the chart to indicate their own preferences – increasing the amount of money spent on education, for example, while reducing that spent on health or defence. When they were satisfied with their spending allocation, they would click to continue and complete their self-assessment tax return.

Two previous experiments conducted by the academic team have shown that allowing tax-payers to express preferences about how their taxes are spent – even when they know that the preferences are non-binding – makes them more positive about paying their taxes and increases tax compliance by up to 15%. Participants in the experiments were also found to be less likely to take advantage of a questionable tax loophole if they had previously been given an opportunity to express their tax-spending preferences.

‘This is an almost zero-cost proposal that has the potential to increase the number of individuals declaring and paying all the tax they owe,’ said Dr De Neve, Associate Professor in Economics and Strategy at Oxford Saïd. ‘The tax-gap for individuals in the UK is around £4.7bn, according to HMRC, so it could make a very positive contribution to increasing the amount of tax collected.’

Dr De Neve emphasised that it was the sense of influence that contributed to increasing tax compliance, even though the participants were aware that the preferences they expressed were not binding. Simply providing information about how taxes have been or will be spent, such as in the form of HMRC’s recently introduced annual tax summary, does not have such an effect. ‘The taxpayer summary is a missed opportunity to get traction on compliance,’ he said. ‘Although raising transparency is surely worthwhile, we find that it is allowing for participation that can really change taxpayer behaviour.’

The academics suggest that all the preferences expressed by taxpayers should be compiled into a report that would be useful to policymakers. They also believe that it would transform the task of completing a tax return and paying tax. Instead of being an unpleasant chore, it could become a dynamic and interactive channel of communication between taxpayers and policy‐makers.

For more information or to speak with Dr De Neve, please contact the press office:

Jonaid Jilani, Press Officer, Saïd Business School
Tel: +44 (0)1865 614678, Mob: +44 (0)7860 259996
Email: jonaid.jilani(at)sbs.ox.ac.uk

Josie Powell, Senior Press Officer, Saïd Business School
Mobile +44 (0)7711 387215; Tel: +44 (0) 1865 288403
Email: josie.powell(at)sbs.ox.ac.uk or pressoffice(at)sbs.ox.ac.uk

Notes to editors

About Saïd Business School

Saïd Business School at the University of Oxford blends the best of new and old. We are a vibrant and innovative business school, but yet deeply embedded in an 800 year old world-class university. We create programmes and ideas that have global impact. We educate people for successful business careers, and as a community seek to tackle world-scale problems. We deliver cutting-edge programmes and ground-breaking research that transform individuals, organisations, business practice, and society. We seek to be a world-class business school community, embedded in a world-class University, tackling world-scale problems.

In the Financial Times European Business School ranking (Dec 2014) Saïd is ranked 10th. It is ranked 10th worldwide in the FT’s combined ranking of Executive Education programmes (May 2015) and 22nd in the world in the FT ranking of MBA programmes (Jan 2015). The MBA is ranked 7th in BusinessWeek’s full time MBA ranking outside the USA (Nov 2014) and is ranked 5th among the top non-US Business Schools by Forbes magazine (Sep 2013). The Executive MBA is ranked 2nd worldwide in the Economist’s Executive MBA ranking (Sep 2015) and 21st worldwide in the FT’s ranking of EMBAs (Oct 2014). The Oxford MSc in Financial Economics is ranked 14th in the world in the FT ranking of Masters in Finance programmes (Jun 2015). In the UK university league tables it is ranked first of all UK universities for undergraduate business and management in The Guardian (May 2015) and has ranked first in nine of the last eleven years in The Times (Sept 2014). For more information, see http://www.sbs.ox.ac.uk/

About Jan-Emmanuel De Neve

http://www.sbs.ox.ac.uk/community/people/jan-emmanuel-de-neve

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Josie Powell
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