Taxation and Representation

Building durable fiscal capacity requires that the state obtains compliance with its tax demands, a struggle for weak states that lack enforcement capacity. One potential option for governments in weak states is to enhance their legitimacy and thereby foster voluntary compliance. In this study, we report results from a phone-based participatory budgeting policy experiment in Sierra Leone that attempted to increase legitimacy and tax compliance by inviting public participation in local policy decision-making. In phone-based town halls, participants shared policy preferences with neighbors and local politicians and then voted for local public services that were subsequently implemented. We find that the intervention durably increased participants’ perceptions of government legitimacy. However, against influential models of tax compliance, we find a robust null effect on tax compliance behavior. In exploratory analyses, we document that partisan affiliation strongly conditions the interventions’ effects on tax compliance behavior and attitudes towards paying taxes.

How can governments tailor tax bills to maximize tax compliance? A large literature has explored how communicating enforcement threats and service delivery achievements through tax messages influences tax compliance (Mascagni 2018; Pomeranz and Vila-Belda 2019; Slemrod 2019). Here, we provide novel evidence on previously understudied messaging strategies that convey the increased procedural fairness of tax collection in our setting. Such appeals to procedural fairness take two forms in our study: First, one treatment group receives information on an appeals process. Second, another treatment group is made more aware of the switch from in-person tax collection – notoriously liable to collusion – to direct tax payments via banks. In this study, we collaborate with the Freetown City Council (FCC) to send different tax bill designs to the universe of property owners in Freetown. Overall, this study investigates whether citizens reward their administration’s increased procedural fairness in tax collection with higher tax compliance.

The current method of property valuation in Freetown, Sierra Leone is highly inaccurate and generally regressive, as it does not take subjective property characteristics that are major determinants of value into account. The newly elected Mayor Yvonne Aki-Sawyerr made revenue mobilization a central pillar of her ‘Transform Freetown’ agenda. As a means of achieving this, the Mayor and her advisers began to reach out internationally for reform advice. This brief outlines a pilot project carried out jointly by the IGC and ICTD for a new approach to property valuation in Freetown using a points-based valuation methodology in the Freetown context. The project had six key findings, including that high-level political leadership was a major enabler of the project’s success. The authors outline six policy considerations for future scale-ups of the research and for reforming property tax in Freetown.