Do women and men behave differently when confronted with taxes? Various studies around the world show that women are more likely than men to pay their taxes, presumably because they are more risk-averse and have greater tax morale, the intrinsic motivation to pay taxes. If that is so, authorities might want to adjust their strategies to take into account gender when trying to deal with delinquent taxpayers.
Such a gender-focus could be fundamental in Latin America and the Caribbean where tax evasion is exceedingly high and there is a tremendous need to improve tax compliance as a way towards healthier budgets, better provision of goods and services, and the fight against inequality.
In 2011, Lucio Castro and I conducted an experiment in Argentina’s municipality of Junín to see if we could nudge tax evaders to pay up. We tried three different approaches to encourage people behind on their property taxes: a message sent to tax delinquents emphasizing the penalties authorities have at their disposal; another message describing the public works made possible by taxes, and a third emphasizing the moral obligation to pay taxes. The most effective message, the one involving penalties (deterrence), showed significant success, achieving a 9% increase in compliance.
Gender in the Payment of Property Taxes
In a paper published in 2023, Andrea López-Luzuriaga and I returned to that study to break down the results by gender and freshly survey the same population to try to understand the difference between men and women’s motivations and resources. We found that women were more likely to pay their property taxes than men. And among those who regularly comply with their tax obligations, receiving the message on penalties increased the probability that women would pay earlier, but didn’t impact men’s decisions. Contrary to our expectations, we found that the letters did affect men more in terms of overall compliance—the payment of overdue taxes by the final due date.
Our survey data provided some insight into these intriguing results. Female-headed households, we found, were more likely than men to worry about the city governments’ enforcement possibilities, and the effect of the deterrence letter on women significantly increased compliance when their tax bill was low. But unlike men, that greater effect on women disappeared as the tax bill increased. This suggested that female households’ more limited resources were their biggest constraint. Looking at a urban household survey that included the municipality, we found that male-headed households were 13 percentage points more likely to have a steady income. Average male incomes were about 30% higher.
The Problem with Indirect Taxes
The results also point to a potential problem with indirect levies, like property taxes, that don’t depend on income, an issue in Latin America and the Caribbean where personal income taxes account for only 10% of revenues, compared to around 25% in the OECD. Given shallow credit markets and very limited options for mortgage financing, people with low incomes may have little liquidity. As a result, they may have trouble paying their property taxes, a phenomenon that is especially relevant for women given the fact that they are less likely to have a fixed income and have lower overall earnings. Indeed, property taxes could increase after-tax gender inequality.
Reaching for Solutions
Tax authorities should pursue enforcement methods that are, at the very least, gender neutral. That means understanding the different ways different taxes affect each gender, and in the case of property taxes, potentially tying those taxes indirectly to income levels. This could be done, for example, by allowing low-income households to receive a property tax discount or access differentiated payment plans based on their income.
