Can Facebook Ads and Email Messages Increase Fiscal Capacity? Experimental Evidence from Venezuela

Tax compliance is a big challenge in weakly institutionalized countries, in which citizens do not trust the State and prefer to evade. Can compliance be increased, and hence fiscal state capacity strengthened, using online strategies? We perform a randomized field experiment in Venezuela's capital, Caracas, to determine if email messages, Facebook ads, or a combination of both, can increase tax compliance. By varying the mechanism used to approach taxpayers, we are able to test if more direct and personalized methods, such as email messages, are more effective than general advertisement tools, such as Facebook ads. Moreover, our design allows us to test if both strategies complement each other and boost the capacity of a local government to increase compliance. Preliminary results suggest that these strategies are cost-effective methods for increasing tax revenues, even in a context of low confidence in the State, as is the case of Venezuela nowadays.