Does Progressivity Raise Tax Capacity? Experimental Evidence from the D.R. Congo

About this event

Progressive taxation is a defining feature of high-income countries' tax systems, but developing countries typically rely on less progressive instruments. We study the introduction of progressive property taxation in a large Congolese city through a citywide field experiment conducted in partnership with the provincial government. Neighborhoods were randomly assigned to either a progressive or a proportional schedule with equal revenue potential. The progressive system increased total revenue by 55% relative to the proportional one. Revenue gains occurred across the property value distribution: at the top, higher statutory rates mechanically outweighed modest compliance losses, while at the bottom, lower rates induced large compliance gains that more than offset the mechanical revenue loss. Cross-randomized information treatments show that taxpayers' responses were driven by their own rates rather than by others' rates or by the perceived fairness of the overall system. Finally, we examine how statutory progressivity maps into effective tax rates (ETRs). Across all systems, ETRs decline with property value --- implying that the rich pay less as a share of wealth --- and this gradient is steepest under the progressive schedule. However, enforcement interventions focused on higher-value properties reverse this relationship, suggesting that investments in targeted enforcement can help align effective with statutory progressivity.