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  5. Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo

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
vol. 112, no. 3, March 2022
(pp. 762-97)
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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.

Citation

Balán, Pablo, Augustin Bergeron, Gabriel Tourek, and Jonathan L. Weigel. 2022. "Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo." American Economic Review, 112 (3): 762-97. DOI: 10.1257/aer.20201159

Additional Materials

JEL Classification

  • D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
  • H26 Tax Evasion and Avoidance
  • H71 State and Local Taxation, Subsidies, and Revenue
  • O12 Microeconomic Analyses of Economic Development
  • O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements