Becoming Legible to the State: The Role of Identification and Collection Capacity in Taxation

Oyebola Okunogbe

No 9852, Policy Research Working Paper Series from The World Bank

Abstract: Whereas the tax compliance literature emphasizes verifying tax liability amounts, this paper highlights two other tax capacity dimensions of particular relevance in lower-income countries: identifying taxable entities and enforcing collection of known liabilities. Leveraging a newly-digitized property database, a randomized experiment in Liberia finds that including identifying information (owners' names and property photographs) in tax notices more than quadruples the payment rate, from 2 percent to almost 10 percent, when the notice also details noncompliance penalties. A second experiment finds that signaling greater collection probability to delinquent taxpayers further increases compliance. These results highlight the importance of targeted investments in tax capacity.

Keywords: Public Finance Decentralization and Poverty Reduction; Tax Administration; Public Sector Economics; Macro-Fiscal Policy; Economic Adjustment and Lending; Taxation & Subsidies; Tax Law; Mining & Extractive Industry (Non-Energy); Crime and Society (search for similar items in EconPapers)
Date: 2021-11-17
New Economics Papers: this item is included in nep-iue, nep-law and nep-pbe
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9852

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