Higher taxes, more evasion? Evidence from border differentials in TV license fees

• We study unique cross-sectional data on the evasion of TV license fees in Austria.
• We exploit border tax differentials to identify the effect of higher license fees on evasion.
• We find a highly significant positive effect: higher fees trigger more evasion.
• Non-parametric analysis and a spatial regression discontinuity design document the robustness of the finding.

This paper studies the evasion of TV license fees in Austria. We exploit border differentials to identify the effect of fees on evasion. Comparing municipalities at the low- and high-fee side of state borders reveals that higher fees trigger significantly more evasion. Our preferred estimator indicates that a one percent increase in fees raises the evasion rate by 0.3 percentage points. The positive effect of fees on evasion is confirmed in different parametric and non-parametric approaches and survives several robustness checks.