efforts by providing a stronger political and social foundation. In turn, more equitable enforcement, and greater ease of paying taxes, builds trust in the fairness of the tax system.

Investing in trust-enhancing reforms can help reinforce improvements in both “enforced” and “quasi-voluntary” compliance. Recent reform efforts and research have often tended to focus on strengthening enforcement or facilitation. One particular tool that has become increasingly popular in tax reform is the so-called “nudge” intervention. Nudges are meant to strengthen quasivoluntary compliance by making choices – and their consequences – more visible to taxpayers.<sup>44</sup> These interventions often take the form of targeted communication about tax-expenditure links or the likelihood of enforcement action through letters or text messages to taxpayers.<sup>45</sup> While nudges have proven their value in some contexts, their effectiveness may be short-lived, have a limited ceiling, or have diminishing returns.<sup>46</sup> The framework presented here stresses the interconnected nature of the two types of compliance, and the need to make trust building – and the strengthening of quasi-voluntary compliance – a central consideration in every aspect of reform, going beyond nudges to ensure sustained and durable change.

The focus on trust likewise brings the construction of stronger fiscal contracts explicitly inside the model. Existing research has made clear that trust-building measures are also likely to lead to broader improvements in the quality of governance. Trust building can contribute to governance in three ways. First, increasing trust in the tax system often goes together with improvements in equity, reciprocity and accountability – that is, focusing on building trust makes strengthening public benefits an explicit part of reform design. Second, investments in building trust – and, particularly, greater and more meaningful transparency and consultation, greater political salience, increased focus on direct taxes, more equitable enforcement, and direct investments in taxpayer engagement – can serve to empower taxpayers and expand their ability to make successful demands on governments for public benefits from tax revenues. Finally, strategic investments in enforcement and trust – including elements like improved data sharing, greater transparency and simplification – can help to support state-wide improvements in administrative performance, and thus improve state capacity to deliver broader benefits to taxpayers.

Finally, investments in building trust – and the accompanying strengthening of quasi-voluntary compliance and fiscal contracts – can generate political support for sustaining and advancing reform. This can occur through two broad channels, reflecting the different dimensions of trust: the fairness and equity of tax systems (“tax system outcomes”), and the reciprocity and accountability in the system (“tax governance outcomes”). Where taxpayers see visible gains in both dimensions, they will be more willing to support future reform, thus potentially underpinning a virtuous circle of reform.

> 44 Sunstein, C. and R. Thaler (2008), _Nudge_ , New York, NY: Penguin Books.

> 45 e.g. Mascagni, G., Nell, C., & Monkam, N. (2017). One size does not fit all: A field experiment on the drivers of tax compliance and delivery methods in Rwanda. _ICTD Working Paper 58_ . Brighton: International Centre for Tax and Development. For a further discussion on targeted communication campaigns see section on Reciprocity.

> 46 For a further discussion on targeted communication campaigns see section on Reciprocity. Mascagni, G. (2018). From the lab to the field: A review of tax experiments. _Journal of Economic Surveys_ , 32(2), 273-301; Sustein, C. (2017). Nudges that fail. _Behavioural Public Policy_ , 1(1):4-25; Manoli, D. S., & Turner, N. (2014). Nudges and learning: Evidence from informational interventions for low-income taxpayers. _NBER Working Paper 20178_ . Cambridge, MA: National Bureau of Economic Research; Bronchetti, E. T., Dee, T. S., Huffman, D. B., & Magenheim, E. (2011). When a nudge isn't enough: Defaults and saving among low-income tax filers. _NBER Working Paper 16887._ Cambridge, MA: National Bureau of Economic Research.

14