Warsaw, 12 June 2017 – In Poland, the number of compliant taxpayers could increase by as much as 20 percent – if correspondence with citizens was more effective, says a new World Bank report. This would mean replacing current official enforcement letters, or “dunning letters”, with letters written in simple, clear and targeted language, or “behavioral letters”, to remind citizens to pay their taxes.
According to the report, behavioral letters that highlight penalties for non-compliance were the most effective in convincing taxpayers to pay the full amount due. Conversely, letters that enticed payment of arrears by highlighting how non-compliance would have adverse consequences on social services, such as schools or roads, were far less effective in soliciting payment.
“The report shows how to increase tax revenues in a simple, quick and cost-efficient manner – by taking advantage of behavioral interventions which are gaining credence world-wide,” said Carlos Piñerúa, World Bank Country Manager for Poland and the Baltic States. “Our experiment was unique in that it included all personal income taxpayers in arrears in Poland – nearly 150,000 people. Also indispensable to this study was the exemplary cooperation between our experts and representatives of the Ministry of Finance and local tax chambers across all regions in Poland.”
Behavioral interventions – based on psychological and sociological insights – are becoming more common in complementing traditional measures such as changes to tax legislation and tax reforms. Therefore, with efficient mobilization of domestic revenues being a major priority for the Government of Poland, the Ministry of Finance is currently researching how behavioral insights can help strengthen tax collection and promote higher tax compliance in Poland.
”We are all taxpayers and the mission of the National Tax Administration is to secure state budget revenue. Therefore, we want the tax administration to be friendly to taxpayers and effective in tax collection,” said Secretary of State Marian Banaś, and Head of the National Tax Administration. “The study carried out by the World Bank contributes to the broad strategy of measures to tighten the tax system and also to raise the level of communication with the taxpayers. The conclusions from this study are a valuable source of knowledge for us and we shall be taking them into consideration in developing the services of the National Tax Administration.”
The report found that the effectiveness of correspondence was also linked to the specific characteristics of taxpayers. For example, the message about the impact of taxes on public services had a negative effect on the compliance of recipients aged between 50 and 64 years, while the same message actually led to an increase in tax compliance among those aged 20–29 years. In addition, this message tended to be more effective in rural rather than urban areas.
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About The World Bank
The World Bank is an international financial institution with the mission to fight poverty and support inclusive growth. The World Bank Group comprises five institutions: International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and International Center for Settlement of Investment Disputes (ICSID). Operating in over one hundred countries, the World Bank Group institutions provide financing, policy advice and other support services to help countries solve their most burning development policy issues.
Poland has been a member of the World Bank since 1986. The Warsaw Office was established in 1990. Since then, the World Bank has been instrumental in supporting Poland’s development. In total, the World Bank has extended loans worth $16 billion to Poland. The World Bank has also conducted a number of analytical projects concerning the public finance sector, doing business, labor market reform, infrastructure, health and many other areas. Among the projects that are now being carried out in Poland by the World Bank are flood protection projects on the Odra and Vistula rivers, supporting less developed regions and working on models of integrated health care.
