Teach to comply? Evidence from a taxpayer education program in Rwanda

Abstract

There is virtually no evidence on the role of taxpayer education to improve tax compliance. We address this gap by providing the first evaluation of a taxpayer education program on compliance behavior, as well as taxpayer knowledge and perceptions. Using a unique dataset of administrative and survey data, we show that training new taxpayers leads to a large and significant improvement on three compliance outcomes: the probability to file declarations, to report a zero-tax amount, and tax due. These results are robust to three estimation strategies: a simple regression exploiting baseline balance across a wide set of observable variables, propensity score matching, and an IV strategy using random assignment to take part in our survey. We identify reduced compliance costs as the key mechanism at play in explaining the relationship between tax education and compliance—particularly increased knowledge and better perceptions on complexity. The effects we document persist over time, beyond the year of implementation.

Pathways Into the Tax Net: Better Ways to Register African Taxpayers

“…This is inefficient from the perspective of a tax administration. 8 There is research evidence that taxpayers who do not file tax returns when initially liable to do so tend to continue as non-filers (Mascagni, Santoro and Mukama 2024). One alternative is to register them anyway, but then charge an annual presumptive tax on the basis of assessed likely business turnover or profit.…”