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Can Whistleblower Programs Reduce Tax Evasion? Experimental Evidence

Author

Listed:
  • David Masclet

    (Univ Rennes, CNRS, CREM - UMR 6211, F-35000 Rennes, France and CIRANO)

  • Claude Montmarquette

    (Centre interuniversitaire de recherche en analyse des organisations (CIRANO), Montréal, Québec (Canada))

  • Nathalie Viennot-Briot

    (Centre interuniversitaire de recherche en analyse des organisations (CIRANO), Montréal, Québec (Canada))

Abstract

There are many ways of tackling tax evasion. The traditional strategies implemented by tax authorities fight fiscal fraud through audit and penalties. However, there also exist a plethora of unconventional methods, such as whistleblower programs. Although there is a rich economic literature on tax evasion, auditing and penalties, tax agencies’ heavy reliance on whistleblower programs has mostly been ignored. We ran an experiment in which taxpayers can punish tax evaders by reporting them to the authorities, even though it is costly for them to do so and despite the lack of any material benefit from doing so. Information on other taxpayers' compliance rates together with the opportunity to report tax evaders has a positive and a very significant effect on the level of income reported. Observing the compliance rates of other participants alone does not suffice to increase tax revenues, while the mere threat of being reported significantly increases revenues.

Suggested Citation

  • David Masclet & Claude Montmarquette & Nathalie Viennot-Briot, 2018. "Can Whistleblower Programs Reduce Tax Evasion? Experimental Evidence," Economics Working Paper Archive (University of Rennes & University of Caen) 2018-11, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:2018-11
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    2. Pawlewicz, Katarzyna & Senetra, Adam, 2024. "Religious involvement in the context of public moral standards and sustainable social development – A case study of Polish voivodeships," Socio-Economic Planning Sciences, Elsevier, vol. 95(C).
    3. Burgstaller, Lilith & Pfeil, Katharina, 2024. "Why whistleblowing does not deter collaborative tax evasion," Freiburg Discussion Papers on Constitutional Economics 24/3, Walter Eucken Institut e.V..
    4. Spagnolo, Giancarlo & Nyreröd, Theo, 2021. "A Fresh Look at Whistleblower Rewards," SITE Working Paper Series 56, Stockholm School of Economics, Stockholm Institute of Transition Economics.
    5. Rustam Romaniuc & Dimitri Dubois & Eugen Dimant & Adrian Lupusor & Valeriu Prohnitchi, 2022. "Understanding cross-cultural differences in peer reporting practices: evidence from tax evasion games in Moldova and France," Public Choice, Springer, vol. 190(1), pages 127-147, January.
    6. Philipp Chapkovski & Luca Corazzini & Valeria Maggian, 2021. "Does Whistleblowing on Tax Evaders Reduce Ingroup Cooperation?," Working Papers 2021:20, Department of Economics, University of Venice "Ca' Foscari".
    7. Xiaohan Liu & Jianmin Liu & Jia Liu & Jinguang Wu & Yu Hao, 2025. "Does a reduction in the pension insurance contribution ratio promote firm productivity? Evidence from a quasinatural experiment in China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 665-688, January.

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    Keywords

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    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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