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Property Tax Compliance in Tanzania : Can Nudges Help ?

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  • Collin,Matthew Edward
  • Di Maro,Vincenzo
  • Evans,David K.
  • Manang,Frederik

Abstract

Low tax compliance in low- and middle-income countries around the world limits the abilityof governments to offer effective public services. This paper reports the results of a randomly rolled out textmessage campaign aimed at promoting tax compliance among landowners in Dar es Salaam, Tanzania. Landowners wererandomly assigned to one of four groups designed to test different aspects of tax morale. They received a simple textmessage reminder to pay their tax (a test of salience), a message highlighting the connection between taxes and publicservices (reciprocity), a message communicating that people who did not pay were not contributing to local or nationaldevelopment (social pressure), or no message (control). Recipients of any message were 18 percent (or 2 percentagepoints) more likely to pay any property tax by the end of the study period. Each type of message resulted in gains inpayment rates, although social pressure messages delivered the lowest gains. Total payment amounts were highest forthose who received reciprocity messages. Nudges were most effective in areas with lower initial rates of taxcompliance. The average estimated benefit-cost ratio across treatments is 36:1 due to the low cost of the intervention,with higher cost-effectiveness for reciprocity messages.

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  • Collin,Matthew Edward & Di Maro,Vincenzo & Evans,David K. & Manang,Frederik, 2022. "Property Tax Compliance in Tanzania : Can Nudges Help ?," Policy Research Working Paper Series 10148, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10148
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    Cited by:

    1. Samiji, Ally A. & Chegere, Martin J. & Ruhinduka, Remidius D., 2023. "The Effect of Carrot and Stick Measures in Fostering Taxpayer Compliance in Tanzania: Evidence from a Laboratory Experiment," African Journal of Economic Review, African Journal of Economic Review, vol. 11(5), December.

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    More about this item

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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