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Title The Origins of Tax Compliance and State Capacity
Post date 03/10/2018
C1 Background and Explanation of Rationale

What are the barriers to raising revenues in developing countries? With the goal of reducing reliance on foreign aid and natural resources, many governments seek to build tax bases among citizens who operate predominantly within the informal sector. Recent research has documented the difficulty of encouraging citizens in these contexts to enter the formal sector and regularly pay taxes. This study explores three understudied determinants of low tax compliance. First, low-capacity states are typically weak at protecting property rights. Second, inefficient methods of tax collection may constrain the effectiveness of enforcement. Third, when citizens face high liquidity constrains, compliance may be elastic to the tax burden. We will assess the effect of these factors on tax compliance with a randomized field experiment that implements interventions affecting each of these margins through a collaboration with the Provincial Government of Kasaï Central in Kananga, Democratic Republic of the Congo, from August 2017 to December 2018. We will vary (1) subsidized access to formal land titles, (2) the method of tax collection—comparing centralized and local collection—and (3) the property tax rates faced by house- holds. Our Pre-Analysis Plan presents the research design and introduces the hypotheses pertaining to the land titling intervention. It will be updated after a pilot of the tax intervention in early 2018 to include hypotheses pertaining to taxation before endline data collection.

C2 What are the hypotheses to be tested?

Please refer to our PAP for detailed discussion of the hypotheses to be tested and the quantities of interest to be estimated.

C3 How will these hypotheses be tested? *

Please refer to our PAP for detailed discussion of our experimental design.

C4 Country The Democratic Republic of Congo
C5 Scale (# of Units) 4356
C6 Was a power analysis conducted prior to data collection? Yes
C7 Has this research received Insitutional Review Board (IRB) or ethics committee approval? Yes
C8 IRB Number IRB17-0724
C9 Date of IRB Approval July 28, 2017
C10 Will the intervention be implemented by the researcher or a third party? Researchers
C11 Did any of the research team receive remuneration from the implementing agency for taking part in this research? not provided by authors
C12 If relevant, is there an advance agreement with the implementation group that all results can be published? not provided by authors
C13 JEL Classification(s) O12, H26, D73, P48