Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo
Pablo Balán, Augustin Bergeron, Gabriel Tourek, Jonathan L. Weigel
American Economic Review · 2022 · Volume 112 · Issue 3
Abstract
This paper investigates the trade-offs between local elites and state agents as tax collectors in low-capacity states. We study a randomized policy experiment assigning neighborhoods of a large Congolese city to property tax collection by city chiefs or state agents. Chief collection raised tax compliance by 3.2 percentage points, increasing revenue by 44 percent. Chiefs collected more bribes but did not undermine tax morale or trust in government. Results from a hybrid treatment arm in which state agents consulted with chiefs before collection suggest that chief collectors achieved higher compliance by using local information to more efficiently target households with high payment propensities, rather than by being more effective at persuading households to pay conditional on having visited them.
Keywords
Bureaucracy, Administrative Processes in Public Organizations, Corruption, Search, Learning, Information and Knowledge, Communication, Belief, Unawareness, Personal Income and Other Nonbusiness Taxes and Subsidies, includes inheritance and gift taxes, Tax Evasion and Avoidance, State and Local Taxation, Subsidies, and Revenue, Microeconomic Analyses of Economic Development, Formal and Informal Sectors, Shadow Economy, Institutional Arrangements
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