Nudging delinquent motor vehicle taxpayers: A randomized controlled trial in Krabi province, Thailand

Abstract

This study investigates whether nudging interventions can improve compliance in the collection of overdue motor vehicle taxes in a developing country context. While behavioral approaches to tax compliance have demonstrated effectiveness in advanced democracies, empirical evidence from fiscally constrained institutional settings remains limited. This study seeks to test the external validity of behavioral interventions in Thailand. A randomized controlled trial (RCT) was conducted across eight districts in Krabi Province, Thailand. Six variants of tax-reminder letters, grounded in behavioral tax compliance theory, were administered to treatment groups, while two districts served as control groups receiving no behavioral intervention. Compliance outcomes were measured by comparing post-intervention payment rates across experimental and control groups. The results show that nudging interventions increased motor vehicle tax compliance by an average of 2.58 percentage points relative to the control groups. Among the tested messages, a deterrence-based reminder emphasizing statutory penalties produced the strongest effect, increasing compliance by 5.01 percentage points. The findings suggest that while behavioral framing mechanisms are effective, expected utility considerations remain highly influential in taxpayer decision-making. The study confirms the contextual robustness of behavioral interventions beyond advanced Western democracies and demonstrates that deterrence theory retains explanatory power when embedded within behavioral communication strategies.  The findings highlight a cost-effective and administratively feasible strategy for enhancing revenue collection in decentralized governance systems. Policymakers in middle-income countries can employ behaviorally informed reminder letters to improve tax compliance without increasing enforcement costs.