Working Paper 91
The role of taxpayer education in improving tax compliance has been largely unexplored in the literature. This paper starts to fill this gap by providing the first rigorous evaluation of the effectiveness of taxpayer education on knowledge, perceptions, and compliance, which took place in Rwanda. Our analysis is based on a unique dataset that combines administrative and survey data. We show that taxpayer education results in significant and large increases in knowledge, which starts from a very low level at baseline, and that it contributes to improving compliance behaviour. Our strongest result is that training new taxpayers helps bring them into the habit of filing tax declarations – an obligation many fail to comply with. In terms of policy, our results show that the benefits of taxpayer education go beyond increased revenue in the short term, and include building a habit of tax compliance. Read the 2-page brief version here.