Taxation and Accountability in Local Government: A Democratic Deficit in Andhra Pradesh

Abstract

This study looks at the vibrancy of local democracy through linkages between local tax collection and accountability: When villagers pay taxes to the village panchayat are they more likely to hold the panchayat accountable? Fifty villages in Andhra Pradesh were surveyed through 500 structured interviews. The study found that in the low-tax environment where panchayats generally follow government-established minimum tax rates, the level of taxation is not politically salient and has no acknowledged impact on panchayat elections. Tax-paying villagers are more likely to participate in the panchayat when residents have connections to outside parties and officials. Except in questions regarding the fairness of internal distributions of works and services, panchayats appear more as the lowest end of the state system than as local democracies. Local government in Andhra Pradesh has a democratic deficit.