Mobilising domestic revenue is crucial for governments’ ability to improve social and economic development through the provision of public services. Consequently, measures to enhance tax revenues receive much attention from policy-makers and researchers. However, efforts tend to focus on single tax bases, ignoring fiscal externalities, i.e. possible effects on revenues from other taxes. Yet, revenue-enhancing policies targeting one tax are likely to affect the collection of other taxes. The introduction of a new tax on commercial properties in Zanzibar offers a unique opportunity to study how additional taxes affect revenues raised.

The project will (1) examine whether property owners are compliant with the new tax; (2) investigate if the introduction of the property tax (PT) impairs revenues collected from other taxes; and (3) shed light on what the underlying reasons for non-compliance and fiscal externalities might be and how to mitigate them. To do this, we exploit the variation created by the randomised gradual roll-out of the PT in combination with two randomised field experiments, and analyse effects using administrative tax data and our own, tailor-made taxpayer surveys.