When Communities Replace Governments, Tax Compliance Collapses
A Kenya study reveals that when people donate to local community projects instead of paying taxes, their willingness to fund state services plummets. The finding challenges conventional thinking on tax enforcement—suggesting governments must prove they deliver fair value, not just threaten penalties.
Originaltitel: Community donations, public goods provision, and taxpayer attitudes: lessons from a survey experiment in Kenya
Tax evasion is a significant challenge in many African countries where motivations for tax compliance remain poorly understood. This study investigates whether donations to community goods undermine individuals' willingness to pay state taxes, particularly where community donations are common and public goods scarce. Using a survey experiment in Kenya, we examine the relationship between community donations and tax compliance attitudes, factoring in access to public goods, government fairness, transparency, and enforcement. Findings indicate that community donations reduce tax compliance attitudes, whereas improved access to public goods enhances positive attitudes toward taxes and trust in government. This suggests that perceptions of a fair exchange with the government can be more important than enforcement.