Progressivity and tax capacity: Experimental evidence from D.R. Congo

• In Event: Property Taxation in Developing Countries

Abstract

The rise of progressive taxation in the early 20th century accompanied some of the most significant expansions in state capacity in modern history, enabling governments in Europe and the
United States to mobilize large-scale resources and fund ambitious social programs. Yet tax systems in low-income countries today remain strikingly regressive — often relying on flat fees and
presumptive taxes that place a disproportionate burden on the poor while raising little revenue. Can
greater progressivity help raise revenue in these settings? This paper reports on a large-scale field
experiment evaluating the randomized introduction of progressive property taxation in the city of
Kananga in the Democratic Republic of the Congo — a context characterized by low compliance
and limited fiscal capacity.
In partnership with the Provincial Government of Kasaï-Central, we assigned 460 neighborhoods to one of three tax regimes: (i) a control group with the status quo and mostly regressive
fixed-fee schedule, (ii) a proportional tax rate based on estimated property value, and (iii) a progressive tax schedule with rates increasing in property value. Crucially, we held constant the valuation
method — based on drone imagery to estimate property size, detailed surveys to capture building
characteristics, expert assessments for a subsample of properties, and a LASSO regression model
to predict values for the remaining properties — as well as the average tax liability across groups
and the administration of tax collection.

Authors

• Augustin Bergeron

• Gabriel Tourek

• Jonathan Weigel