Nudging Automatic Debit for Property Tax: Evidence from two natural field experiments

This study conducted two natural field experiments in Yokohama City, Japan, to evaluate the effectiveness of behavioral nudges in promoting automatic debit registration for property tax payments. While much of the existing literature on tax compliance focuses on reminder letters, relatively little attention has been paid to payment method choice, despite its potential to reduce administrative costs associated with reminders and enforcement. We find that a nudge flyer and the inclusion of the owner code required for the application increase the probability of applying for automatic debit by 2.7 and 2.8 percentage points, respectively. When implemented together, the combined intervention increases adoption by 8.8 percentage points, suggesting complementarities between benefit-enhancing and cost-reducing components. Despite the increase in automatic debit adoption, we find no evidence that these interventions improve on-time payment within the time frame observed in our experiments. This may reflect low baseline delinquency among new taxpayers or the possibility that the interventions primarily affect taxpayers who would have paid on time even in the absence of automatic debit. Taken together, our findings highlight both the potential and the limits of behavioral nudges in improving tax administration outcomes.