S7 Ep47: No Taxation without Administration

Research on how to collect more tax in developing countries has focused on how information, especially administrative data, can help. But in Uganda for example, buyers and sellers report different amounts for the same VAT transaction in 79% of cases. The invoices exist ... but nobody in the tax administration is comparing them. In this week's VoxDev Talk Anders Jensen (Harvard Kennedy School) and Jonathan Weigel (UC Berkeley) argue that information needs an administration that is able to use it. They have examined the research evidence on how tax authorities are organised, who they hire, where they send their staff, and how much freedom those officials get. To maximise revenues they find that many of Max Weber's century-old rules for how to run a bureaucracy still apply, but others often need to bend a little.  The research behind this episode: Jensen, Anders, and Jonathan L. Weigel. 2026. "No Taxation without Administration: Bringing the State Back into the Public Finance of Developing Countries." *Journal of Economic Literature* 64 (1): 246-280. The working paper version is available as NBER Working Paper 34729. To cite this episode: Phillips, Tim, Jonathan Weigel, and Anders Jensen. 2026. "No Taxation without Administration." *VoxDev Talks* (podcast). **About the guests** Anders Jensen is Associate Professor of Public Policy at Harvard Kennedy School, a Faculty Research Fellow at the National Bureau of Economic Research, and research co-director of the State programme at the International Growth Centre. His research spans the rise of modern tax systems, informality and consumption taxes, and how governments with limited capacity can improve tax administration and enforcement. He works with governments in Ghana, Zambia, Liberia and Brazil. Jonathan Weigel is Assistant Professor of Business and Public Policy at the Haas School of Business, University of California, Berkeley, and a Faculty Research Fellow at the National Bureau of Economic Research. His research spans state capacity, taxation, corruption, and the links between religion and institutions. His fieldwork is based mainly in the Democratic Republic of Congo, where he runs the research organisation ODEKA. **Research cited in this episode** **No taxation without information.** Dina Pomeranz's study of Chile's value-added tax showed how the paper trail between firms helps to enforce the tax; each firm has a reason to demand an invoice from its supplier, and the tax authority can use those invoices to detect evasion. Pomeranz, Dina. 2015. "No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax." *American Economic Review* 105 (8): 2539-2569. **Third-party reporting in Denmark.** Henrik Kleven and co-authors ran a randomised tax audit experiment in Denmark. Evasion was close to zero on income that employers and banks report to the tax authority, and substantial on income that taxpayers report themselves. Kleven, Henrik Jacobsen, Martin B. Knudsen, Claus Thustrup Kreiner, Soren Pedersen, and Emmanuel Saez. 2011. "Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark." *Econometrica* 79 (3): 651-692. **Missing transactions in Uganda.** The 79% figure comes from VAT reports in Uganda, where sellers and buyers declare different amounts for the same transactions. The gap suggests that the tax authority does not systematically cross-check the reports, or that firms act as if it does not. Almunia, Miguel, Jonas Hjort, Justine Knebelmann, and Lin Tian. 2024. "Strategic or Confused Firms? Evidence from 'Missing' Transactions in Uganda." *Review of Economics and Statistics* 106 (1): 256-265. **The US tax gap.** Even a high-capacity administration struggles without third-party data. For tax years 2014 to 2016, the Internal Revenue Service estimated that 55% of income subject to little or no information reporting, such as sole proprietor income, was misreported, compared with 1% of wages and salaries. Internal Revenue Service. 2022. *Tax Gap Estimates for Tax Years 2014-2016*. Publication 5364. Washington, DC: IRS. **"In developing countries, tax administration is tax policy."** The paper's epigraph comes from Milka Casanegra de Jantscher, who co-edited an IMF volume on tax administration with Richard Bird. The line sums up an older policy consensus that building the tax authority matters more than setting the right rates. Bird, Richard M., and Milka Casanegra de Jantscher, eds. 1992. *Improving Tax Administration in Developing Countries*. Washington, DC: International Monetary Fund. **Weber's ideal bureaucracy.** Max Weber described a "rational" bureaucracy with a single chain of command, specialised departments, recruitment by examination, promotion by seniority and decisions governed by rules rather than discretion. Jensen and Weigel use his categories to organise the evidence, and show how developing countries adapt them to local conditions. Weber, Max. 1978 (first published 1921). *Economy and Society: An Outline of Interpretive Sociology*. Berkeley: University of California Press. **The sinews of power.** The phrase comes from John Brewer's history of the British state, which credits a professional, specialised Excise Office with raising the revenue that paid for Britain's 18th-century wars. Brewer, John. 1990. *The Sinews of Power: War, Money, and the English State, 1688-1783*. Cambridge, MA: Harvard University Press. **Medium taxpayer offices in Indonesia.** Indonesia created dedicated offices for medium-sized corporate taxpayers, which sharply cut the number of taxpayers per auditor. Revenue from the firms in these offices rose by 64% in the short term and by 128% after six years. Basri, M. Chatib, Mayara Felix, Rema Hanna, and Benjamin A. Olken. 2021. "Tax Administration vs. Tax Rates: Evidence from Corporate Taxation in Indonesia." *American Economic Review* 111 (12): 3827-3871. **Transfer mispricing and the arm's length principle.** Multinationals can shift profits by setting the prices of transactions between their own subsidiaries. Tax authorities test these prices against the arm's length principle, which asks what unrelated firms would have charged each other. Staff in large taxpayer offices must learn to apply it; staff who deal with small firms never need to. **The Pendleton Act.** The US Civil Service Reform Act of 1883 introduced competitive examinations for federal jobs, to limit patronage appointments. Abhay Aneja and Guo Xu find that the reform improved public sector performance. Aneja, Abhay, and Guo Xu. 2024. "Strengthening State Capacity: Civil Service Reform and Public Sector Performance during the Gilded Age." *American Economic Review* 114 (8): 2352-2387. **City chiefs as tax collectors.** In Kananga, in the Democratic Republic of Congo, neighbourhoods were randomly assigned to property tax collection by state agents or by local city chiefs. Chiefs raised revenue by more than 40%, mainly because they knew which households were more willing to pay. Balan, Pablo, Augustin Bergeron, Gabriel Tourek, and Jonathan L. Weigel. 2022. "Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo." *American Economic Review* 112 (3): 762-797. **Assigning tax collectors.** The same tax campaign randomly assigned collectors to teams and to neighbourhoods. Simulations suggest that pairing the best collectors together, and sending them to the neighbourhoods with the highest revenue potential, would raise compliance by 37% compared with random assignment. Weigel, Jonathan, Pedro Bessone, Augustin Bergeron, Gabriel Tourek, and John Kabeya Kabeya. 2025. "Supermodular Bureaucrats: Experimental Evidence from the DRC." *American Economic Review*. **Discretion, technology and bribes.** In Ghana, property tax collectors equipped with tablets and digital maps spent less time finding properties and more time deciding whom to revisit; collections rose by 103% relative to the control group. In Tajikistan, electronic filing removed face-to-face contact with inspectors, and firms at high risk of evasion paid more tax, probably because they could no longer bribe the inspector. Dzansi, James, Anders Jensen, David Lagakos, and Henry Telli. 2023. "Technology and Tax Capacity: Evidence from Local Governments in Ghana." NBER Working Paper 29923. Okunogbe, Oyebola, and Victor Pouliquen. 2022. "Technology, Taxation, and Corruption: Evidence from the Introduction of Electronic Tax Filing." *American Economic Journal: Economic Policy* 14 (1): 341-372. **Public goods and tax compliance.** Several studies test whether a government can persuade citizens to pay more tax by providing public goods first. In Acayucan, a small city in Mexico, randomised street paving raised property tax compliance. Programmes in Mexico City, Pakistan and Freetown, Sierra Leone, found small or mixed effects. Fernandez, Manuel, Marco Gonzalez-Navarro, and Climent Quintana-Domeque. 2025. "Local Public Goods and Property Tax Compliance: Evidence from Residential Street Pavement." Working paper. Khan, Adnan Q., Asim I. Khwaja, Benjamin A. Olken, and Mahvish Shaukat. 2023. "Strengthening the Social Compact: Experimental Evidence from Pakistan." Working paper. **The demand-driven social contract.** Douglass North and Barry Weingast argued that 17th-century English taxpayers agreed to pay more tax in exchange for a greater say in government. In Kananga, citizens in neighbourhoods assigned to door-to-door property tax collection became more likely to attend town hall meetings and to evaluate government performance. North, Douglass C., and Barry R. Weingast. 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England." *Journal of Economic History* 49 (4): 803-832. Weigel, Jonathan L. 2020. "The Participation Dividend of Taxation: How Citizens in Congo Engage More with the State When It Tries to Tax Them." *Quarterly Journal of Economics* 135 (4): 1849-1903. **Procedural justice.** Citizens are more likely to accept a state's right to tax when its officials apply the law in a fair, predictable and equal way, rather than arbitrarily or on the basis of personal connections. Margaret Levi and co-authors treat procedural justice as one of the main sources of legitimacy. Levi, Margaret, Audrey Sacks, and Tom Tyler. 2009. "Conceptualizing Legitimacy, Measuring Legitimating Beliefs." *American Behavioral Scientist* 53 (3): 354-375. **China's administrative model.** Wei Cui, a law professor at the University of British Columbia, describes a Chinese tax system that relies less on taxpayer declarations and more on large numbers of decentralised officials who manage individual taxpayers. China has as many local tax offices as post offices, and collects about 20% of GDP in tax. Cui, Wei. 2022. *The Administrative Foundations of the Chinese Fiscal State*. Cambridge: Cambridge University Press. **More VoxDev Talks episodes** Profit shifting: A global challenge hitting developing countries the hardest. Ludvig Wier explains the transfer mispricing problem that large taxpayer offices must tackle, and the tools low-capacity governments can use to detect it. Why civil service reform fails (and what actually works). Martin Williams studied 131 civil service reforms in six African countries. Of these, 34 tried to link pay to performance; none delivered. **Related reading on VoxDev** Can low-capacity governments work with local leaders to increase tax revenues? Evidence from the Democratic Republic of Congo, a VoxDev article by Pablo Balan, Augustin Bergeron, Gabriel Tourek and Jonathan Weigel on the Kananga chiefs experiment. Improving state effectiveness through bureaucrat assignment: Evidence from the Democratic Republic of Congo, a VoxDev article on how a tax authority can raise revenue by changing who works with whom, and where. Taxation and Economic Development, a VoxDevLit that reviews the research on why low- and middle-income countries collect less tax, and what they can do about it.