Property Tax Compliance in Tanzania: Can Nudges Help?

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Digital Tools for Boosting the Impact of Fiscal Decentralization in Africa's Local Economies

“…SNGs often attempt to foster tax compliance by strategically prioritizing immovable property taxation, recognizing its potential as a lucrative revenue generator ( Collin, Di Maro, Evans, & Manang, 2022 ). However, people are often reluctant to pay property taxes because they do not see any tangible benefits, particularly in areas characterized by poor infrastructure with sporadic or non-existent service delivery ( Monkam & Moore, 2015 ).…”

“…Madagascar’s efforts to mobilize property tax revenue are severely constrained by limitations on the operational capacities of local governments in various facets of property taxation, including property identification, valuation, collection, enforcement mechanisms, and dispute resolution. Some studies in Tanzania and Kenya, for example, Collin et al (2022) and Mwangi (2019) , found that property tax policies were often neglected due to taxpayers’ skepticism about the government’s use of the revenue. With a focus on larger properties, local authorities in both countries had a limited tax base, resulting in reduced revenue and compromised service delivery efficiency.…”

“…resolution. Some studies in Tanzania and Kenya, for example, Collin et al (2022) and Mwangi (2019), found that property tax policies were often neglected due to taxpayers' skepticism about the government's use of the revenue. With a focus on larger properties, local authorities in both countries had a limited tax base, resulting in reduced revenue and compromised service delivery efficiency.…”

Factors Contributing to Tax Compliance among Small and Medium Sized Enterprises: A Case of Selected SMEs in Iringa Municipality

“…In developing countries high amount of tax revenue is collected from indirect taxes such as value-added taxes (VAT). According to Collin (2021) tax depends on the kind of political institutions in place, political systems that place stronger constraints on the executive power are more likely to lead to taxation systems that have a higher degree of transparency towards their citizens. Thus, they are able to demand greater accountability on the part of the state with respect to the taxes they pay.…”

“…Tax is a source of the government revenue which is accountable with financing all government expenditure and investment, the government needs enough revenue to sufficiently fund public goods and services (Collin, 2021). Small and medium-sized enterprises (SMEs) have a tendency to resist voluntary tax compliance, yet Sub-Saharan African nations prioritize increasing domestic revenue.…”