Evaluating Progressive Versus Proportional Digitized Property Tax Collection

Low tax revenue is a significant challenge facing governments in low-income countries, which typically collect less than half of the revenue that high-income countries collect as a share of gross domestic product. Without enough revenue, governments cannot provide the public goods and services necessary for economic development.

To examine whether progressive property taxation can increase tax compliance and revenues in the Democratic Republic of Congo (DRC), which collected just 9 percent of its GDP in 2021, the implementing partner is partnering with a provincial tax authority on a randomized controlled trial (RCT) that compares neighborhoods that are assigned to the current flat fee schedule, a proportional tax rate schedule, or a schedule of progressive property tax rates.

The participating neighborhoods are in the provincial capital of Karanga.

This RCT measures the effects of the different tax schedules on total government revenue, household compliance, perceptions of fairness, and motivation to pay taxes and is designed to inform future tax policy.

This contract will increase the endline survey sample to improve the studys ability to detect statistically significant effects. This funding will also help scale up digitization of the tax assessment process.

Digitization, including the development of a comprehensive database of properties and assessed values, will strengthen the provincial governments ability to administer taxes by improving record keeping and updating.