Property Tax Compliance in Tanzania : Can Nudges Help?
Low tax compliance in low- and middle-income countries around the world limits the ability of governments to offer effective public services. This paper reports the results of a randomly rolled out text message campaign aimed at promoting tax compl...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099747108222222580/IDU0f8171cd40cde7047ca0b17b091c7a6453c03 http://hdl.handle.net/10986/37913 |
| Summary: | Low tax compliance in low- and
middle-income countries around the world limits the ability
of governments to offer effective public services. This
paper reports the results of a randomly rolled out text
message campaign aimed at promoting tax compliance among
landowners in Dar es Salaam, Tanzania. Landowners were
randomly assigned to one of four groups designed to test
different aspects of tax morale. They received a simple text
message reminder to pay their tax (a test of salience), a
message highlighting the connection between taxes and public
services (reciprocity), a message communicating that people
who did not pay were not contributing to local or national
development (social pressure), or no message (control).
Recipients of any message were 18 percent (or 2 percentage
points) more likely to pay any property tax by the end of
the study period. Each type of message resulted in gains in
payment rates, although social pressure messages delivered
the lowest gains. Total payment amounts were highest for
those who received reciprocity messages. Nudges were most
effective in areas with lower initial rates of tax
compliance. 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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