New Research Project: SAFARI in Zanzibar [15.07.21]
For most people thinking of Zanzibar means holidays, palm trees and beaches. Prof. Dr. Nadja Dwenger from the Department of Public Finance is using the introduction of a property tax for her research project SAFARI (Successful Advances in Fiscal ARchITecture) as a natural experiment in tax enforcement. The study is being conducted in cooperation with the Chr. Michelsen Institute in Bergen, Norway and started in April. The project is funded for four years by the Research Council of Norway with 1.1 million euros.
What instruments does the state have at its disposal for tax enforcement? How does the introduction of a new tax affect the enforcement of existing taxes? Nadja Dwenger examines questions like these in various academic studies and in different contexts. In addition to scientific excellence, a practice-oriented approach is important to her.
This is one of the aspects of the new SAFARI research project. In sub-Saharan Africa, the ratio of tax revenues to gross domestic product (GDP) is very low at 10 to 20% compared to European countries at over 30%. Property tax could serve as an important element to increase government revenues. On the island of Zanzibar, which belongs to Tanzania, where the ratio of tax revenue to GDP is particularly low at 11.8%, the research project is accompanying the introduction of a property tax. Nadja Dwenger and her team are working closely with the local authorities. The gradual implementation of a new, elementary tax offers ideal conditions for making the effects on other, already existing taxes measurable. In addition, field experiments and surveys will be conducted in the further course of the project to investigate the significance of equity considerations for the acceptance of the tax and the taxpayers' tax honesty. Furthermore, the researchers are investigating what influence the introduction of a new tax has on economic development in general.
The research results should open up new perspectives for developing countries to independently improve the financing of their national concerns and thus fulfil the Sustainable Development Goals of the United Nations. In addition, the findings are to be taken into account in future decisions on the development policies of industrialised nations.
