Abstract
Large-scale field experiments on tax compliance have been a thriving field of research in many regions of the world. However, Africa is still lagging behind, as administrative data from anonymised returns is available only in a handful of countries. To the best of our knowledge, there is as yet no published evidence of a tax field experiment from Africa. This paper reports the results of a pilot experiment in Rwanda that served as a stepping stone for a larger experimental study on tax compliance. In this pilot, we test the process of messaging taxpayers to encourage them to comply voluntarily, by providing information on sanctions. The results indicate that communication strategies that aim to inform taxpayers may be effective in increasing tax compliance. However, these results are only indicative. They will be complemented by further evidence from the larger field experiment, where we test different types of messages and delivery methods. Nonetheless, this paper provides some initial insight into the use of tax experiments in Africa, both in terms of initial evidence and lessons learned for future efforts in this field.
Highlights
The literature on tax compliance has recently seen a surge of evidence from field experiments
Tax compliance behaviour is determined by a mix of enforcement measures, such as audits and the effective use of third-party data, and quasi-voluntary compliance, which is motivated by factors often labelled as ‘tax morale’,2 such as trust in institutions, social norms, fiscal exchange, and moral factors
This paper reports the findings of a pilot experiment which has been used primarily to test the feasibility of larger-scale field experiments in Africa, and which has served as a stepping stone for a larger experimental study on tax compliance carried out in Rwanda
Summary
The literature on tax compliance has recently seen a surge of evidence from field experiments. Some of the most notable ones are typically large informal sectors, weak enforcement, and low level and quality of service delivery In this context, this paper reports the findings of a pilot experiment which has been used primarily to test the feasibility of larger-scale field experiments in Africa, and which has served as a stepping stone for a larger experimental study on tax compliance carried out in Rwanda.. Even when taxpayers want to come forward and report previously undeclared income, they may not be able to do so because of high sanctions or lack of information on the legal consequences In this context our letters may provide a cost effective way to encourage them to revise their account, while benefiting from lower fines that they might not have been aware of. Even if econometric results are reported in this paper, we give more emphasis to the lessons learned on implementing field experiments in Africa
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