Rebuilding the Social Compact: Urban Service Delivery and Property Taxes in Pakistan
The summary to this paper states:
This impact evaluation investigates whether strengthening the link between local taxation and
urban services can revitalize the social compact between citizen and state. A significant
challenge to the provision of local public services in developing economies is the inability to
raise adequate resources, especially through local taxation. In many countries, the social
compact, whereby citizens agree to pay taxes to fund their desired services, is broken. A low
willingness to pay taxes leads to low revenue collection, and prevents adequate service
provision, which in turn reduces willingness to pay and can even lead to citizen disengagement
from the state. We investigate whether strengthening the link between local collections and
urban services can increase citizens’ willingness to pay for services, improve service delivery,
and enhance local politics. We test this in major urban centers in Punjab, Pakistan via several
interventions - including eliciting citizen preferences for specific services when taxes are
collected, earmarking revenue for specific services, and enabling local politicians - that credibly
strengthen the link between tax collection and urban service provision. This paper presents the
experimental design and reports preliminary impacts on tax payments. On the positive side we
find that the project succeeded in eliciting citizen preferences and delivering services against
them, thereby changing the relationship between tax collectors and citizens. However, we find
that despite successful delivery of services and finding (small) treatment effects on being in an
intervention, many citizens are unaware of being in a special scheme or of having received
greater local goods. Not surprisingly, we therefore find muted effects on attitudes towards the
state or increased tax payments. We address this issue by focusing on raising awareness in an
ongoing round of service delivery so that we can examine whether doing so will lead to
improved attitudes towards to state and greater tax payment.
A copy of the paper can be found via the link below:
Khan-et-al-Final-Report-August-2022.pdf (theigc.org)
