Behavioral engagement and fiscal incentive design: time series evidence from southern Brazil

Tonetto, Jorge Luis and Fochezatto, Adelar and Pique, Josep Miquel and Rapetti, Carina (2026): Behavioral engagement and fiscal incentive design: time series evidence from southern Brazil.

Abstract

The state of Rio Grande do Sul, Brazil, implemented four behavioral experiments aimed at improving tax compliance. This study contributes to the literature by examining multiple behavioral tax programs over an extended period, providing a longitudinal assessment of citizen engagement. It highlights changes in citizen engagement in the Tax Education Program and their possible causes, focusing on the evolution of new subscribers over time and their relationship with the implementation of innovative projects. We estimate time-series regression models for new subscribers between November 2012 and May 2023, including specifications with and without structural breaks. The results show three moments of high impact on subscriber numbers. The key moment corresponds to the launch of Devolve-ICMS and Receita Certa, with a 635% increase in new subscribers. Inflation showed a small negative impact. Reductions in prize amounts and low-value incentives negatively affected engagement. Programs that provided direct and visible financial returns to citizens—reinforcing perceptions of fairness and reciprocity in the tax system—showed particularly strong effects on engagement. The findings suggest that tax innovations were successful in increasing citizen engagement and, consequently, reducing tax evasion.

• Item Type: MPRA Paper
• Language: English
• Keywords: Behavioral economics; Tax compliance; Technological Change; Time series analysis; Public policy; Brazil JEL Codes: D91, H26, O33, C22, H11, O54
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; D - Microeconomics > D9 - Intertemporal Choice > D91 - Intertemporal Household Choice ; Life Cycle Models and Saving; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America ; Caribbean

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