Publication: Becoming Legible to the State: The Role of Identification and Collection Capacity
in Taxation
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2021-11
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2021-11-18
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Whereas the tax compliance literature emphasizes verifying tax liability amounts, this paper highlights two other tax capacity dimensions of particular relevance in lower-income countries: identifying taxable entities and enforcing collection of known liabilities. Leveraging a newly-digitized property database, a randomized experiment in Liberia finds that including identifying information (owners’ names and property photographs) in tax notices more than quadruples the payment rate, from 2 percent to almost 10 percent, when the notice also details noncompliance penalties. A second experiment finds that signaling greater collection probability to delinquent taxpayers further increases compliance. These results highlight the importance of targeted investments in tax capacity.
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“Okunogbe, Oyebola. 2021. Becoming Legible to the State: The Role of Identification and Collection Capacity
in Taxation. Policy Research Working Paper;No. 9852. © World Bank. http://hdl.handle.net/10986/36605 License: CC BY 3.0 IGO.”
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