NOVAFRICA Student Group previews the NOVAFRICA seminar by Moussa P. Blimpo

Is there a positive impact of alleviating asymmetry in civic information on tax participation?
How does more knowledge on taxation change tax participation and tax revenues?
What constraints may governments face regarding the taxation of micro and informal enterprises (MIE) in Togo?

On Friday, December 10th 2021, at 02:30 pm (Lisbon time), NOVAFRICA Knowledge Center welcomes Moussa P. Blimpo from the World Bank and the University of Toronto to answer these questions and to present the findings of the paper “Asymmetry in Civic Information: An Experiment on Tax Participation among Informal Firms in Togo”, co-authored by Paul Castañeda from the University of Wisconsin-Madison. If you would like to join the seminar, you can either join us on the Nova SBE campus in room A 219B or via Zoom Webinar (register here).

As micro and informal enterprises (MIE) in low-income countries constitute a large share of economic entities and as they lack basic understanding about the government and the tax system, the authors conducted a randomized controlled trial in 383 MIEs in the capital of Togo, Lomé, to analyze if eliminating asymmetry in civic information enhances tax involvement. This intervention educated businesses about the tax code and its purpose to capture the reciprocal aspect of taxes that is important in modern states.

The intervention discovered that higher revenue firms increased their tax involvement while lower revenue firms decreased their participation, resulting in a net fall in tax participation. Further data implies that lower-income businesses expanded their economic operations, and that the shift in taxpayer composition likely resulted in an increase in total tax revenue, offsetting the drop in participation. The data suggest that aggressive tax collection techniques aimed at microbusinesses can backfire.

Finally, this paper contributes to two strands of literature. On the one hand, it is one of very few papers discussing the tax behavior of MIEs while providing training about firm owners´ obligations to the state. Secondly, the authors contribute to a growing literature regarding tax mobilization in developing countries. They add emphasis on the extensive margin of tax compliance which is important for the adoption of the fiscal contract.

Moussa P. Blimpo is a Senior Economist in the Office of the Chief Economist for the Africa Region (AFRCE) at the World Bank and a Senior Fellow at the University of Toronto´s Munk School of Global Affairs and Public Policy. He previously worked at the University of Oklahoma as an Assistant Professor of economics and international studies. His studies focus on a variety of policy-relevant African economic issues. His recent publications have focused on issues such as electricity access in Sub-Saharan Africa, the impact of disruptive technologies on Africa´s economies´ ability to leapfrog and the acquisition of human capital in Africa. Blimpo holds a PhD in economics from New York University and he worked at Stanford University´s Institute for Economic Policy Research (SIEPR) for two years as a postdoctoral researcher. He founded and ran the Center for Research and Opinion Polls (CROP), a Togo-based think tank, from 2011 until 2015.

Written by Constantin Friedrich Nixdorff, member of the NOVAFRICA Students Group and student of the Masters in Economics at Nova SBE.