A World Bank blog by J. Karver published on 9 October 2025 looked at ways in which behavioural science can assist tax compliance. The author points out that the level of tax compliance is not just a case of following rules but is shaped by the environment in which choices are made; the dynamics of social interactions; the belief system of the taxpayer; and the actions and attitudes of tax officials. These factors react with the emotions and psychology of the taxpayer. The design of effective tax systems should take into account the behavioural dimension of taxpayers and its effect on voluntary compliance.
The World Bank’s Mind, Behavior, and Development Unit (eMBeD) has designed and tested a large number of behavioural interventions. Taxpayer decisions on tax compliance are affected by social and psychological factors. A knowledge of behavioural science can enable a tax administration to achieve effective and sustainable domestic revenue mobilization.
The tax administration can raise significant amounts of additional tax revenue by appropriate behavioural interventions. The author refers to the World Bank’s policy note of 31 July 2025 explaining how behavioural insights can improve compliance and collection. A Behavioural Taxpert’s Toolkit has been developed, outlining how these insights can improve tax compliance and collection. The policy note sets out three essential tools for tax practitioners, referred to as the nudge, budge, and trudge.
The nudge is a reminder letter or notification that directly engages with taxpayers. A reminder or warning if expressed clearly and simply can motivate the taxpayer to take action to improve tax compliance. The nudge has been shown in practice to be effective as a compliance tool and the cost for the tax administration is low.
A budge is a longer-term engagement with stakeholders through public campaigns or educational programs on the benefit of paying taxes. This aims to present tax compliance as a positive activity. People would be encouraged to pay taxes to benefit society.
The trudge is a strategy to improve the attitude of tax officials. This would include training of tax officials to become more service-oriented and helpful in their behaviour. The trudge would build more trust between the tax administration and the taxpayers, improving compliance.
In using behavioural science to improve outcomes, the first step is to understand the tax compliance or collection issues the tax administration is facing. The administration should prioritise practical learning and should then build up its capacity to design interventions. Digital infrastructure can be developed to support the actions. Evidence-based policy can be formulated on the basis of tax data to strengthen policy design and evaluation.
