As a social purpose company, we want to maximise the amount of good we can do. This often means capacity building—supporting partners around the world to achieve social impact at scale.
Over the past 20 months, in one of our largest capacity building programmes to date, BIT has been working alongside government partners in Indonesia, Bangladesh and Guatemala. We’ve been supporting ten different institutions to run their own behavioural insights projects, with the aim of improving the lives of millions of people – many of whom are living on less than USD 5 per day.
To scale and spread expertise in behavioural interventions, we are conducting 18 randomised control trials (RCTs) to address a variety of issues, including tax compliance, birth registration and education. We’ll be profiling the results of this programme, and the civil servants who contributed to its success, in a new series of blog posts.
We’re very grateful for the support of the Global Innovation Fund and, of course, the efforts of our government partners, without whom none of this work would be possible.
Indonesia: Tax trial brought forward USD 1.93 million
Our first two trials in Indonesia focused on improving tax compliance – an area where BIT has considerable experience (see previous blog posts). Working with the Indonesian tax authority, Direktorat Jenderal Pajak (DJP), we:
- Conducted an online experiment using BIT’s Predictiv platform to reduce errors when taxpayers complete their tax return. Our intervention (a two-page flyer) increased accuracy by 8 per cent and could benefit up to 1.9 million taxpayers. Download the full report or a short briefing.
- Ran our largest RCT with 11.2 million taxpayers to encourage submissions of annual tax returns at least two weeks before the deadline. Our best performing intervention (an email with planning support) increased early filing by 7 per cent and overall filing by 2 per cent. It also brought forward an extra USD 1.93 million in tax payments at the point of filing, equivalent to USD 13.53 million if scaled to the whole sample. Download the full report or a short briefing.
How do DJP plan to scale behavioural approaches to tax administration?
Collaborating with BIT on these projects helped DJP set up a Behavioural Insights Task Force with the skills to continue running behavioural insights projects on their own. For example, for the trial to encourage early tax filing, DJP conducted interviews with 20 taxpayers to understand their perspective before working with BIT to design the email interventions. They also conducted the randomisation and analysed the taxpayer data, with support from BIT to write a trial protocol, prepare Stata code, and interpret the results.
DJP have identified a number of behavioural insights projects they would like to conduct in the future, such as reducing underreporting of tax liabilities and improving data quality. Some local and regional tax offices have also requested their support to develop and test behavioural interventions. We believe that the willingness of Indonesian tax officials to embrace experimental methods will have long-term positive impacts on government revenue and taxpayer satisfaction.
What skills and organisational capacity did DJP acquire from these projects?
Adityawarman (Adit), Head of Section for manufacturing sector compliance, Directorate of Tax Potential, Compliance and Revenue.
Adit was an early adopter of behavioural insights at DJP. Since getting involved in the BIT capacity building programme, Adit has continued to develop his intervention design and statistical skills. He is one of the founding members of DJP’s Behavioural Insights Task Force and now feels confident to share his knowledge with everyone in DJP.
Gitarani Prastuti (Gita), Directorate of Tax Potential, Compliance and Revenue.
Gita worked with Adit on behavioural insights projects in the past. Armed with this experience and the knowledge she gained from a BIT workshop, she co-designed the flyer which was tested in the Predictiv trial. As her role at DJP has evolved to align with her passion for behavioural insights, she now applies a behavioural lens to many different aspects of tax compliance.
We’d like to extend a huge thanks to Steve Dardo from the Australian Tax Office who was on secondment to DJP during the implementation of these projects. His advice, support and enthusiasm for behavioural approaches helped make them a success.