Odd-Helge Fjeldstad

Research Professor, Coordinator: Tax and Public Finance

Nadja Dwenger

Associated Research Professor

Mobilizing domestic revenues is crucial for developing countries to achieve the UN’s Sustainable Development Goals (SDGs). However, tax evasion is a major challenge in many countries. Research shows that laws and regulations do not sufficiently address tax evasion, and that there is a need for approaches that address ‘voluntary compliance’. Voluntary compliance is likely to be particularly important in countries where enforcement capacity is weak. The overall objective of the proposed study is to generate knowledge and research capacity to address the societal challenge of mobilizing more domestic revenue in mainland Tanzania and Zanzibar. We focus on businesses, which have received little attention in research on voluntary compliance, even though companies typically account for most of the tax revenue in most developing countries. We investigate two factors that are potentially important to voluntary compliance: (i) norms that influence willingness and ability to pay tax, and (ii) trust in the tax administration. We investigate personal and social norms for both formal and ‘informal’ taxes (e.g., payments to community and kin) and how these norms interact. The project combines qualitative interviews, taxpayer surveys, administrative tax data and two field experiments targeted at enhancing social norms for compliance and trust in the tax administration.

The project is funded by the Research Council of Norway and will run over three years (2021-24). It is a collaboration between CMI, Institute of Tax Administration, Norwegian Institute of International Affairs, the Norwegian Tax Administration, REPOA, the Royal Norwegian Embassy in Dar es Salaam, and Zanzibar Revenue Board.