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Making financial sense: How she's improving taxpayers' lives with behavioural economics
By Rachael Boon
IRAS Scholarship
Ms Xu Dingjiao, a director with the valuation and stamp duty branch of property tax at the IRAS, uses her knowledge to analyse taxpayers’ behaviour. PHOTO: SPH MEDIA/FRENCHESCAR LIM

Understanding how people make decisions led this IRAS scholar to recommend the most convenient payment mode and nudge taxpayers to pay their taxes on time

Sometimes, all it takes to nudge someone in the right direction is a simple text message. 

In 2013, the Inland Revenue Authority of Singapore (IRAS) experimented with SMS reminders to encourage taxpayers to pay their taxes on time. The messages would also recommend the most convenient payment mode and highlight that taxpayers still had a “last chance” before penalties were imposed. 

The experiment, which drew on the concept of behavioural nudges, was overwhelmingly successful: Forty-seven per cent of text message recipients promptly paid their overdue tax, compared with 16 per cent in the control group. The reminder text messages also helped reduce the number of calls and walk-ins to the Revenue House in Novena as many taxpayers had received the information they needed.

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“There are many reasons why people don’t pay taxes on time. Everyone is busy, so it’s not difficult to miss a letter or deadline,” says Ms Xu Dingjiao, who was part of a team at IRAS that was looking into the use of behavioural insights to nudge people to do what they always wanted to do.

Her team, along with other government agencies, examined how simple changes in the way agencies communicate with the public can influence behaviours and improve compliance rates in areas such as tax filing. She was also part of a project to redesign reminder letters to clearly communicate how much tax is to be paid and when payment is due.

“Behavioural economics help us understand people’s decisions in that context, rather than assuming people are intentionally not paying their taxes,” says the 34-year-old, who did a double major in economics with operations research and management science at University of California, Berkeley on the IRAS undergraduate scholarship

After completing the four-year bachelor’s degree in just three years, she went on to pursue a master’s in statistics at Harvard University in 2010.

Helping the economy

Ms Xu has always been interested in understanding how people make economic decisions such as purchases. 

“Economics has a close link to the work done at IRAS, and I felt I would be able to apply what I studied,” she says. 

For example, she got to use her analytics skills to build models to help identify tax non-compliance, such as suspicious businesses that artificially separate for tax incentives. 

After graduating from Harvard University in 2011, she became a tax auditor with IRAS, a role which gave her the training and appreciation for tax assessment and audit work. She then moved on to research, behavioural insights and design thinking and later became a manager of the team.

“We are serious about work, but there is a lot of emphasis on innovation, creativity and improving the lives of taxpayers too.”

– Ms Xu Dingjiao, recipient of the Recipient of the IRAS Undergraduate and Postgraduate Scholarships

Today, she is a director with the valuation and stamp duty branch of the property tax division. The branch oversees the administration of stamp duty, capital valuation for the government, and supports the property tax division in data analytics and research. The division also administered Covid-19 efforts such as the rental relief framework and Rental Support Scheme at the height of the pandemic.

“I felt proud of what we’ve done to help businesses during those trying times,” says Ms Xu.

Embracing innovation at work

“People seem to think IRAS has a strait-laced culture. When I tell my friends I work at IRAS, they ‘act scared’, which always amuses me,” she says, of the stereotypical view people have of the government tax agency.

“Yes, we are serious about work, but there is a lot of emphasis on innovation, creativity and improving the lives of taxpayers too.”

For instance, Ms Xu was part of IRAS’ transformation office, called LEA:D – LEveraging Analytics, Design and Digitalisation, and helped to develop strategies to design an easier tax experience for taxpayers. She was in charge of developing a design strategy, setting the vision and purpose of design in IRAS, as well as articulating the processes, training and building of a central team to scale up the use of design. 

Understanding how taxpayers tick is one reason why she likes interacting with people. She also enjoys managing a team and motivating others. That was one of the reasons why she chose to pursue a Master of Business Administration at INSEAD in 2018 on an IRAS postgraduate scholarship.

“I was interested in being with a large team and was ready to contribute as a people manager in any department at IRAS,” says Ms Xu.

She herself benefited from a formal mentorship programme in place for IRAS scholars, but notes IRAS managers are often informal mentors anyway.

“Most of my bosses were mentors informally, as most managers here are invested in the careers of their staff and want them to develop medium- to long-term careers here,” she says.

New officers, regardless of whether they are scholars or not, “also get to try a variety of projects that shape the direction of their careers,” she adds.

Ms Xu wants to pay it forward and take on more responsibilities as part of her contribution to nation-building in Singapore.

“There’s a great team of people here who have new ideas and are willing to work beyond their scope of usual work such as the Covid-19-related work, even when they have to sacrifice personal time, and we want to work together with the community on what’s best for them,” she says.

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