Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271855 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10211
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study the causal effects of household tax credits on the willingness to demand legally provided services using two survey experiments with 1.974 German homeowners. Participants choose between hypothetical offers of service providers and are randomly assigned to a policy scenario 1) without a tax credit, 2) a tax credit households can claim through the annual tax return, or 3) a tax credit granted by the seller at source. We also vary the refund rate of the tax credit (20/30%) and whether the price including the tax reduction is displayed. All tax credits increase the willingness to pay for offers with invoice as well as the probability to select an offer with invoice. The effectiveness of the tax credit is significantly higher when two attractive features (at source+30%) are combined or when the reduction is made salient. We estimate that about two thirds of respondents who would use the tax credit would have demanded an offer without invoice also without the tax credit.
Subjects: 
tax credit
financial rewards for compliance
tax evasion
tax compliance
third-party reporting
survey experiment
discrete choice experiment
JEL: 
H26
C93
E26
J22
O17
Document Type: 
Working Paper
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