Anders Jensen, Harvard University

Technology and Tax Capacity:  Evidence from Local Governments in Ghana

with James Dzansi, David Lagakos, Henry Telli

Abstract
This paper studies the role of technology in local-government tax collection capacity
in the developing world. We first conduct a new census of all local governments in
Ghana to document a strong association between technology use and property tax
billing, collection and enforcement. We then randomize the use of a new revenue collection
technology within one large municipal government. Revenue collectors using
the new technology delivered 27 percent more bills and collected 103 percent more
tax revenues than control collectors. Collectors using the new technology learned
faster about which households in their assigned areas were willing and able to make
payments. We reconcile these experimental findings in a simple Beckerian time-use
model in which technology allows revenue collectors to better allocate their time
towards households that are the most likely to comply with taxpaying duties. The
model’s predictions are consistent with experimental evidence showing that treatment
collectors are more likely to target households with greater liquidity, income,
awareness of taxpaying duties, and satisfaction with local public goods provision.