NOVAFRICA Student Group previews the NOVAFRICA seminar by Jonathan Weigel

The Democratic Republic of the Congo (DRC) is a fragile state which needs to build completely a tax revenue base as it has the lowest tax-GDP ratios in the worldFor example, Kananga, one of the largest cities in the country, collected tax revenues of only $0.30 per person in the year of 2015. To increase the tax revenue, the government of the province has been conducting a series of citywide door-to-door collection campaigns since 2016 (Weigel, 2020; Balan et al., 2020). 

The enforcement capacity of the state is one of the most important features in increasing tax compliance and, therefore, the tax revenues (e.g., Besley and Persson, 2009; Kleven et al., 2011; Pomeranz, 2015; Naritomi, 2019). However, one of the key features that may also improve state effectiveness and increase tax revenues is through the optimal allocation of the tax collectors.  

Hence, Jonathan Weigel and co-authors seek to provide answers about the effect on tax revenues of the optimal assignment of tax collectors, specifically in a low-capacity state as the DRC. 

To estimate the optimal allocation, the authors use a two-stage random assignment of property tax collectors: (1) into teams, where high and/or low ability collectors are paired together; and (2) to neighbourhoods, where high and/or low ability teams are paired with high and/or low payment propensity households.  

The optimal allocation will involve assigning individuals with the same type of ability to the same team; and high-ability teams (or low-ability teams) in neighbourhoods with households with higher (or lower) propensity to pay. Implementing the optimal assignment was found to increase tax compliance by an estimated 36% relative to the status quo (random) assignment. 

To learn more about such research, join us at the NOVAFRICA Seminar on Wednesday, November 10th at 2.30pm (Lisbon time) in person or via Zoom, where Jonathan Weigel will present the findings of this paper. 

Jonathan Weigel is an assistant professor in the Business and Public Policy Group at University of California Berkeley’s Haas School of Business, and affiliated with the LSE’s International Development department, JPAL, CEPR, EGAP, the IFS, and STICERD. He received his PhD in Political Economy and Government from Harvard University in 2018. His research interests are at the intersection of political economy, development, and public economics. His work mainly explores the role of state capacity in development with a focus on taxation but also, the relationship between culture (especially religion) and institutions. Weigel runs a research organization, Odeka, based in D.R. Congo; and, Besides D.R. Congo he has conducted field work in Tanzania and Haiti. 

Written by Rita Neves, student of the Bachelors in Economics at Nova SBE and member of the NOVAFRICA Students Group