Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo

Balan, Pablo; Bergeron, Augustin; Tourek, Gabriel; Weigel, Jonathan

doi:10.1257/aer.20201159

Cited by 66 publications

(54 citation statements)

References 82 publications

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“…This is in line with growing evidence that in some contexts local elites are more capable of mobilising revenues than the state (see e.g. Balán, Bergeron, Tourek and Weigel 2020;van den Boogaard 2020). 84 In the case of Gedo, however, this additional information does not necessarily reflect 'the desire of communities to impose more redistributive (socially enforced) tax schedules than are feasible under formal taxation' (Olken and Singhal 2011: 26); as described in Section 4, while more vulnerable populations contribute less, informal payments are regressive among those that make any informal payments.…”

Section: Informal Taxes As An Optimal Response To Information and Enf...supporting

confidence: 87%

Explaining Informal Taxation and Revenue Generation: Evidence from south-central Somalia

Boogaard¹,

Santoro²

2021

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Most people in low-income countries contribute substantially to the financing of local public goods through informal revenue generation (IRG). However, very little is known about how IRG works in practice. We produce novel evidence on the magnitude and regressivity of IRG and its relationship with the state in a fragile context, Somalia. We rely on original data from surveys with over 2,300 households and 117 community leaders in Gedo region, as well as on extensive qualitative research. We first show that IRG is prevalent. Over 70 per cent of households report paying at least one informal tax or fee in the previous year, representing on average 9.5 per cent of annual income. We also find that, among households that contribute, poorer ones contribute larger amounts than richer ones, with higher incidence in relation to their income. Further, in line with theory and expectations, informal payments have inequitable community-level effects, with individuals in wealthier communities making more informal payments than in poorer ones and, correspondingly, having access to a greater number of public goods. We then consider four explanations for the prevalence of IRG. First, IRG clearly fills gaps left by weak state capacity. Relatedly, we show that IRG can bolster perceptions and legitimacy of the state, indicating that sub-national governments may actually benefit from informal taxation. Second, informal taxing authorities are more effective tax collectors than the state, with informal taxing authorities having greater legitimacy and taxpayers perceiving informal payments to be fairer than those levied by the state. Third, dispelling the possibility that informal payments should be classified as user fees, taxpayers overwhelmingly expect nothing in return for their contributions. Fourth, in contrast to hypotheses that informal payments may be voluntary, taxpayers associate informal payments with punishment and informal institutions of enforcement. Our research reinforces the importance of IRG to public goods provision in weak formal institutional contexts, to everyday citizens, and to policymakers attempting to extend the influence of the federal state in south-central Somalia. Foremost, informal tax institutions need to be incorporated within analyses of taxation, service delivery, social protection, and equity. At the same time, our findings of the complementary nature of IRG and district-level governance and of the relative efficiency of revenue generation by local leaders have important implications for understanding statebuilding processes from below. Indeed, our findings suggest that governments may have little incentive to extend their taxing authority in some fragile contexts.

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Section: Informal Taxes As An Optimal Response To Information and Enf...supporting

confidence: 87%

Explaining Informal Taxation and Revenue Generation: Evidence from south-central Somalia

Boogaard¹,

Santoro²

2021

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“…Aligning the societal institutions with local structures may be a less ambitious, more practical and effective approach. For example, a recent study in the Democratic Republic of Congo found that giving local chiefs the authority to collect state taxes increased property tax compliance by 3.3% (Balan et al, 2022). Although the chief still collected bribes, they were able to use local knowledge of whom to target with tax enforcement and thus increased the overall tax revenue by 43%.…”

Section: Corruptionmentioning

confidence: 99%

Cultural evolutionary behavioural science in public policy

Schimmelpfennig

Muthukrishna

2023

Behav. Public Policy

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Interventions are to the social sciences what inventions are to the physical sciences – an application of science as technology. Behavioural science has emerged as a powerful toolkit for developing public policy interventions for changing behaviour. However, the translation from principles to practice is often moderated by contextual factors – such as culture – that thwart attempts to generalize past successes. Here, we discuss cultural evolution as a framework for addressing this contextual gap. We describe the history of behavioural science and the role that cultural evolution plays as a natural next step. We review research that may be considered cultural evolutionary behavioural science in public policy, and the promise and challenges to designing cultural evolution informed interventions. Finally, we discuss the value of applied research as a crucial test of basic science: if theories, laboratory and field experiments do not work in the real world, they do not work at all.

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“…In another related study, Balan et al (2022) show that tax collection by local elites can raise more revenue than collection by state agents. Their evidence suggests that the primary mechanism is informational advantages of chiefs: enabling chiefs to better target tax visits based on households' underlying payment propensities.…”

Section: Introductionmentioning

confidence: 96%

“…This is especially the case in developing countries where market transactions are frequently off the record. At the same time, community leaders have local information and so also the potential to raise state capacity if they are integrated in its processes (Balan et al 2022). Local leaders often operate through informal or semi-formal practices and are a common feature of communities across Africa.…”

Section: Introductionmentioning

confidence: 99%

Ask a Local: Improving the Public Pricing of Land Titles in Urban Tanzania

Manara¹,

Regan

2025

Review of Economics and Statistics

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Information on willingness-to-pay is key for public pricing and allocation of services but not easily collected. Studying land titles in Dar-es-Salaam, we ask whether local leaders know and will reveal plot owners' willingness-to-pay. We randomly assign leaders to predict under different settings then elicit owners' actual willingness-to-pay. Demand is substantial, but below exorbitant fees. Leaders can predict the aggregate demand curve and distinguish variation across owners. Predictions worsen when used to target subsidies, but adding cash incentives mitigates this. Finally, we demonstrate that leader-elicited information can improve the public pricing of title deeds, raising uptake while maintaining public funds.

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Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo

Cited by 66 publications

References 82 publications

Explaining Informal Taxation and Revenue Generation: Evidence from south-central Somalia

Explaining Informal Taxation and Revenue Generation: Evidence from south-central Somalia

Cultural evolutionary behavioural science in public policy

Ask a Local: Improving the Public Pricing of Land Titles in Urban Tanzania

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