Working Paper 129

While much knowledge is being generated on the impact of the pandemic, we still know very little on its implications on taxation in low-income countries. Yet, tax is crucial to fund crisis response and recovery, in addition to broader development plans and expanded government expenditure.

This paper starts addressing this gap using a unique dataset of survey and administrative data from Rwanda. We document two significant shifts in taxpayers’ views: perceptions about the fairness of the tax system improve by 40 per cent, and their attitudes to compliance become more conditional on the provision of public services of sufficiently good quality.

Importantly, these shifts are accompanied by improvements in actual compliance behaviour: using data from tax returns, we show that firms that declare after the onset of the crisis are substantially more compliant than others. We then investigate public support for increasing various tax options to fund crisis response and recovery. Taxing large companies and the richest enjoy the greatest support, which, however, declines as income increases.

These results allow us to make some recommendations and considerations on tax policy responses to the crisis.


Giulia Mascagni

Giulia Mascagni is a Research Fellow at the Institute of Development Studies and Research Director of the ICTD. Her main area of work is taxation, but she also has research interest in public finance, evaluation of public policy, and aid effectiveness. She is an economist by training, holding a PhD in Economics from the University of Sussex. Her main geographical interest lies in African countries, with a particular focus on Ethiopia and Rwanda.

Fabrizio Santoro

Fabrizio is a Research Fellow at the Institute of Development Studies, and the Research Lead for the second component of the ICTD's DIGITAX Research Programme. His main research interests relate to governance, public finance, and taxation, with a strong focus on impact evaluation methodologies and statistical analysis. He holds a PhD in Economics from the University of Sussex.
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