Publication: Lying to the Taxman or Accepting a Helping Hand?: Evidence from a Novel Experiment on SMEs in Tanzania
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Date
2025-02-10
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Published
2025-02-10
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Abstract
This paper presents the results from a novel field experiment that examined the impact of in- creasing the presence of revenue authority officers on tax compliance and tax morale among small and medium-size enterprises in a lower-income country. The experiment was embedded in the implementation of a representative, face-to-face survey of SMEs across mainland Tanzania. An independent survey firm was accompanied by Tanzania Revenue Authority officers, who observed the interviews in a randomly selected set of urban and peri-urban wards. This translated into a temporary increase in the presence of tax officers throughout parts of the country. The findings indicate that an increase in tax officer presence did not have a significant overall impact on tax compliance and tax morale among SMEs, as measured using a combination of administrative and survey data. However, there were short-term increases in compliance in the largest city and sustained increases in tax morale in the rest of the country. A follow-up survey suggests that these results were likely driven by an increase in the perceived credibility of enforcement rather than meaningful increases in perceptions of facilitation and trust.
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“Paul, Revocatus; Mdee, Ephraim; Fimbo, Massaga; Karver, Jonathan; Chaudhry, Zain; Hoy, Christopher. 2025. Lying to the Taxman or Accepting a Helping Hand?: Evidence from a Novel Experiment on SMEs in Tanzania. Policy Research Working Paper; 11062. © World Bank. http://hdl.handle.net/10986/42786 License: CC BY 3.0 IGO.”
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