Presence of tax officials in Tanzania has opposite effects on trust and compliance by region
A recent Tanzania study by the International Centre for Taxation and Development reveals that increased visibility of tax officials improves trust and tax compliance in wealthier, economically integrated regions but decreases trust and payments in poorer, marginalized areas. The findings suggest that tax outreach strategies must be context-specific to be effective across sub-Saharan Africa.
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A new study conducted in Tanzania by the International Centre for Taxation and Development shows that the presence of tax officials affects trust and compliance differently depending on the region’s economic status.
The research involved a randomized control trial with 1,210 small businesses across 119 urban and peri-urban wards. In wealthier and more economically integrated areas, increased visits by tax officials strengthened trust in the state and were linked to higher tax payments.
Conversely, in poorer and marginalized regions, the same level of tax official presence reduced trust and led to lower tax compliance. The study highlights that taxpayer education and outreach do not automatically build trust everywhere.
The researchers connected survey data with administrative tax records, confirming that shifts in attitudes corresponded with actual payment behaviors. This suggests that tax authorities need to tailor their outreach efforts to local contexts, considering the existing relationship between citizens and government services.
While outreach remains important, the findings caution against one-size-fits-all approaches, emphasizing the complexity of tax compliance dynamics in sub-Saharan Africa.