Template-Type: ReDIF-Paper 1.0
Title: Fiscal Exchange and Tax Compliance: Strengthening the Social Contract Under Low State Capacity
Author-Name: Laura Montenbruck
Author-Email: laura.montenbruck@su.se

Classification-JEL: H20, O23, D73
Keywords: Social contract, Property tax, Public services, Tax compliance

Abstract: This article provides evidence that increased salience of public service provision can
strengthen the social contract and increase tax compliance in a low-capacity setting.
I conduct a field experiment randomizing information about public service provision
across 5,494 property owners and tenants in Freetown, Sierra Leone. Receiving information
increases property tax payments by 20% on average. The effect is driven by
increases in tax compliance on both the extensive and intensive margin. Residents of
low-value properties are 7–16 percentage points more likely to pay taxes when informed
about public services that are both geographically accessible and respond to the citizens’
most urgent needs, suggesting a benefit-based approach to taxation. Revenue
effects are largely driven by residents of high-value properties, who depend less on the
public provision of services, and for whom the treatment seems to act as a more general
signal of government performance.

Note: 
Length: 92
Creation-Date: 2025-01
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp620
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_620