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Introduction
How should tax systems be designed and how should expenditures be targeted to maximize welfare?
Economics provides concepts and tools to analyze these questions, but in the real world, the design
of tax and expenditure policies fundamentally depends on the structure of political institutions.
Political economy considerations are particularly important in contexts where the social contract
between a government and its citizens may be weakened by elite capture, conflict, or limited
institutional capacity.

This conference brought together leading researchers and policymakers to discuss recent research
on the political economy of public finances with relevance for low- and middle-income countries
(LMICs). Topics included the impact of election rules and procedures; norms and preferences related
to taxes and expenditures; the role of civil servants and of management practices in public-sector
institutions; subnational public finances and inter-government fiscal transfers; and the measurement
of corruption and favoritism and novel monitoring interventions.

Key Takeaways
The 5th WB/IFS/ODI Conference explored critical dimensions of the political economy of public
finances, highlighting the importance of understanding political actors’ incentives, and the behaviors
of politicians and citizens, and their interactions with economic outcomes. The list of takeaways is
long (as further detailed below), and includes the following:

•   Regulations aimed at addressing environmental externalities can fail if they do not take into
    account the political economy context and the interests of all stakeholders. Regulatory
    uncertainties can significantly impact budget execution.
•   Politicians’ performance responds to electoral incentives and to the threat of a vote of no
    confidence. Citizens’ acceptance of reforms is linked to the information that they receive about
    the reform, and the perceived progressivity of the tax and benefits system.
•   Taxpayer behavior can be influenced by religious leaders, by local identities and by the interaction
    of identity and preferences for redistribution.
•   Fiscal rules such as debt limits can have significant unintended effects on government programs
    and spillovers on the private sector, with sometimes ambiguous impacts on development
    outcomes.

Conference Structure
The conference was opened by Professor Adnan Khan (UK Foreign, Commonwealth & Development
Office) and featured a keynote address by Professor Rohini Pande (Yale University) along with eight
panels presenting new cutting-edge research. The conference was closed by Aart Kraay (World
Bank). The topics of the panels were identified and prioritized based on an open call for submission
of papers. For more on the papers and presentations from the conference visit the website, which
also contains videos of select presentations:

https://www.worldbank.org/wbtaxconference.




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The conference was organized by the World Bank and by the Institute for Fiscal Studies and ODI
through the TaxDev Centre (Centre for Tax Analysis in Developing Countries). It was supported by
the Norwegian University of Life Sciences (NMBU), by the UK government through UK aid and
through a UKRI Future Leaders Fellowship, and by the Skatteforsk Center for Tax Research.

Organizing Committee
Annette Alstadsæter, Pierre Bachas, Megan Breece, Anne Brockmeyer, Verena Fritz, Pablo Garriga,
Hazel Granger, Christopher Hoy, Oyebola Okunogbe, Claudia Vargas Pastor, Greg Opie, David
Phillips, Thiago Scot, Mahvish Shaukat, Dario Tortarolo, Yani Tyskerud.

Participants
Over the two-day conference, there were 799 and 822 registered attendees for each day. Unique
viewership stood at 328 on the first day and 198 on the second day, with a peak of 140 concurrent
viewers. Across both days, the event attracted 390 unique viewers from 89 countries. In addition to
the virtual attendance, 96 people attended the conference in person in London over the two days.



 Opening Remarks
 Adnan Khan (Foreign Commonwealth & Development Office)

After an introduction from Chiara Bronchi (World Bank), Adnan Khan opened the conference. He
highlighted that the challenges related to taxation in LMICs nowadays are not primarily related to tax
design – although there are open questions, e.g. on optimal tax design in an information-constrained
environment and in an environment in which enforcement is critical. Rather, the key challenge
currently is the political economy of taxation, i.e. the fact that governments and the elite are not
always able or willing to reform tax systems. It is unclear how the ability and willingness to reform tax
systems interact with each other.

As an example, Khan mentioned that the political economy of tax reform is a key challenge in
Bangladesh, which he visited recently. Bangladesh has experienced development success in many
areas but struggles to increase tax collection. A key question that arose in the discussion with
policymakers in Dhaka was the following: How much will the inability of the state to tax constrain the
country’s development trajectory, and its potential as an emerging Asian tiger?

Brazil, on the other hand, is a hopeful example, where an important VAT reform has recently become
possible due to a change in the political equilibrium. There are important questions around how this
change emerged, and how much is it supported by political institutions and norms. In closing, Khan
highlighted two open questions for participants to ponder: 1) How to encourage tax administrations
(and governments in general) to work more with researchers? How to improve governments’ capacity
to engage with researchers, how to help them manage downside risks? What kind of interventions
and engagements can generate possibilities for collaborations? 2) How does engagement on tax
reform change the political economy, e.g. norms, political markets, institutions, etc? What can outside
actors usefully contribute?


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 Keynote Speech
 Rohini Pande (Yale University)
 Markets, Taxes, Inequality and Environmental Regulation: Experimental Evidence from LMICs

Rohini Pande's presentation focused on the intricate relationship between environmental economics
and developing countries, with a special emphasis on India. She explored how economic
development correlates with carbon intensity, highlighting the disparities in fossil fuel consumption
between high-income countries and their lower-middle-income counterparts. She also highlighted
the connection between wealth inequality and CO2 emissions within nations, underscoring the
disproportionately severe impact of climate events on low-income communities.

Throughout her talk, Pande examined the complexities of applying environmental regulations. She
underscored the necessity for political consensus and the consideration of diverse stakeholder
interests. Presenting several case studies from India, including the Gujarat environmental audit
reform, the Surat Emissions Trading Scheme, and the Punjab Crop Burning initiative, she discussed
effective regulatory strategies and how they navigated political-economy problems and market
incentives. Pande concluded by emphasizing the critical need for context-specific solutions,
advocating for a comprehensive approach that combines regulation, market mechanisms, and
incentives to effectively address environmental challenges in lower-income settings.

The video for Professor Pande’s keynote address is linked on the conference website.



 Session 1: Redistribution

Dirk Foremny (University of Barcelona and Institut d’Economia de Barcelona)
Preferences for Redistribution Regional Identities and Decentralized Taxation

Topic: The interaction between regional identities, decentralized taxation, and preferences for
redistribution.

Approach: Employed a quasi-experimental survey design to create exogenous variations in the
knowledge of actual tax design and among participants. This was used to compare the preferences
for redistribution between those aware and unaware of their own region’s taxing powers.

Main findings: Tax decentralization changes citizens’ attitudes towards redistribution, with a positive
impact on those with stronger regional identities and a negative impact on those with a stronger
national identity.

Belinda Archibong (Barnard College, Columbia University)
Protest Matters: The Effects of Protests on Economic Redistribution
Topic: The effects of protests on economic redistribution.

Approach: Investigated the impact of protests in Nigeria on government policy and economic
resource redistribution, using 26 years of archival public finance data and geocoded data on protests.

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Main findings: Protests led to increases in revenue transfers to protesting states during military rule if
politically aligned. The response of governments to protests varied with their political alignment and
was associated with an increase in police violence against protesters.



 Session 2: State Capacity

Claudio Ferraz (University of British Columbia)
Revenue Slumps and Fiscal Capacity: Evidence from Brazil (joint with Dirk Foremny and Juan
Francisco Santini)

Topic: The impact of significant non-tax revenues on local tax collection in Brazil.

Approach: Examined how unexpected changes in intergovernmental transfers, resulting from
population updates, affected local government tax collection in Brazil.

Main findings: Unexpected loss of fiscal transfers induced local governments to increase tax
collection and invest more in tax bureaucracy, meaning higher wages and quality of tax collectors.
There were asymmetric effects in which municipalities receiving positive shocks did not reduce taxes.
The results also highlighted the role of political incentives and the quality of the bureaucracy (including
the quality of the town’s mayor) in the adjustment process.

Yusuf Neggers (University of Michigan)
Updating the State: Information Acquisition Costs and Public Benefit Delivery (joint with Eric Dodge,
Rohini Pande and Charity Troyer Moore)

Topic: Updating the state’s approach to information acquisition and its impact on public benefit
delivery.

Approach: Collaborated with the Indian government to create a mobile phone app to provide real-
time information on the payment processing status for India’s flagship rural workfare program – the
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

Main findings: The use of this app reduced payment processing times by officers, and lowered
variability and likelihood of "late" processing. The processing time impacts were concentrated in areas
where mid-level officers supervise larger numbers of local administrative units.

Mustafa Kaba (Max Planck Institute for Research on Collective Goods, Bonn)
Unforeseen Events or Unscrupulous Officials? Electoral Accountability and Law Abuse in Public
Procurement (joint with Serkant Adiguzel and Murat Koyuncu)

Topic: The effects of centralization on public procurement practices and outcomes.

Approach: Studied the central takeover of local authorities in Turkey, focusing on the administrative,
fiscal, and political authority aspects.




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Main findings: Centrally appointed trustee mayors tend to use more discretionary tools for contract
awarding; - they use the unforeseen event clause 24 percentage points more, and sealed-bid
auctions 32 percentage points less than elected mayors. Both trustees and elected mayors engaged
in substantial cost manipulation to attain more discretion. This suggests that centralization can affect
procurement practices, potentially leading to less transparent and efficient outcomes.



 Policy Session: The Politics of Carbon Pricing

Maciej Grabowski | Former Minister of Environment, Republic of Poland; current President, Centre
for Strategic Mind-set

Ismail Momoniat | Former Acting Director-General, National Treasury, South Africa

Carlos Muñoz Piña | Former Director General for Revenue Policy, Ministry of Finance, Mexico; current
Lecturer, Instituto Tecnológico Autónomo de México

The insights from this session are also summarized in a recent blog.

This session involved presentations from policymakers and practitioners with first-hand experience
of introducing various forms of carbon pricing and incorporated their reflections on lessons learned
in terms of developing political support for, and addressing opposition to, carbon pricing instruments.

Maciej Grabowski discussed perspectives on the politics of carbon pricing with reference to Poland.
He argued that energy transition and decarbonization has not been a priority in Poland over the last
10-15 years. This is partly due to the fact that price signals have been weak for a long time, although
the EU Emissions Trading Scheme (ETS) has led prices to increase a lot in recent years, to over 100
Euro/ton in the early 2020s, resulting in large revenues for Poland for permit auctions, and some
pushback from utilities which ran a public relations campaign against the ETS. Given this background,
Grabowski emphasized that the tax system is only one element of carbon pricing, alongside regulation
and financial incentives, and that the will to undertake decarbonization in large firms is linked to
corporate governance and ownership issues; in Poland the belief of the irreversibility of the
decarbonization process is stronger in the private sector. Grabowski argued that regional and local
consensus and agreement with local labor unions is necessary to support the decarbonization
process, providing a case study of the transition from a coal-fired power plant to a biomass plant in
Central Poland which benefited from a support program for employees financed through the Just
Transition Fund. Finally, he emphasized that additional budget revenues may or may not bring about
accelerated decarbonization, their effect depends on how they are used. In Poland, revenues from
permit auctions were used to accelerate the country’s energy transition, e.g. by supporting the
expansion of rooftop solar systems, and to address energy inequality and provide safety nets for
individuals working in the coal industry. Grabowski also mentioned the risk that a deepening inequality
caused by decarbonization can be easily exploited in the political debate.

Ismail Momoniat’s presentation provided an overview of the introduction of the carbon tax in South
Africa in June 2019, the result of a long-term commitment by the Government of South Africa

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spanning the period 2006-2019. The reform process was influenced by both the evolving international
context and domestic political economy factors. He emphasized that the introduction of the tax was
always going to be challenging because was still considerable skepticism around climate change in
the mid-to-late 2000s, that South Africa has large and relatively cheap coal resources, and because
some he fact that some stakeholders feel that South Africa needs to use its coal resources to support
the development process. These debates have all occurred in the context of ongoing electricity
rationing/”load-shedding”, which became necessary due to the poor management of state-owned
energy companies. Proponents of the reform needed to take a consultative approach and “win over”
Ministers in Cabinet, both the ruling and opposition parties, labor unions, businesses, and civil society
organizations. At the request of parliament, businesses and trade unions also developed a Jobs
Mitigation and Creation Plan. Although Momoniat acknowledged that the current carbon tax rate is
too low and that there are too many exemptions, he emphasized that these trade-offs were necessary
to allow the bill to pass through Parliament and that it is possible for the rate to be increased over
time, although removing exemptions may be challenging. Finally, he cautioned about the potential
risk of future reversal.

Carlos Muñoz Piña discussed insights from his paper about the transition from negative to positive
carbon pricing in Mexico. This process involved a staggered phase out of fuel subsidies which peaked
at 1.8% GDP in 2008 and were a large burden on the public finances, to generating positive fuel tax
revenues equivalent to 1.6% of GDP in 2018; this significantly contributed to a reduction in Mexico’s
carbon tax emissions. Muñoz Piña emphasized that policymakers thinking about carbon pricing
policies should not restrict their thinking to explicit carbon pricing and Emissions Trading Schemes,
but should also consider implicit pricing, for example in excise taxes applied to fossil fuels. He was
positive about the progress that Mexico has made in reducing emissions without impacting economic
growth and felt that Mexico’s experiences could provide valuable lessons for policymakers in other
countries.



 Session 3: Subnational Fiscal Policy and Decentralization

Rose Camille Vincent (ETH Zürich)
Shine a (Night)light: Decentralisation and Economic Development in Burkina Faso (joint with Olivier
Bargain and Emilie Caldeira)

Topic: Quasi-experimental evaluation of public sector decentralization in Burkina Faso.

Approach: Utilized a Difference-in-Differences strategy with satellite data (night light information) to
proxy local economic development and assess the impact of decentralization reforms implemented
in Burkina Faso.

Main findings: The reform had a positive and sizable impact on local economic development,
especially for first wave communes. However, it did not uniformly benefit all areas, with late-
decentralized communes lacking the capacity to effectively implement it. The study emphasized the
importance of revenue potential over administrative functions or central connections for successful
decentralization outcomes.

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Antonella Bancalari (Institute for Fiscal Studies)
Resource Windfalls, Public Expenditure and Labour Markets: Evidence from Municipalities in Peru
(joint with Juan Pablo Rud)

Topic: The impact of increased local public expenditure on labor markets in Peru after arrival of novel
resources.

Approach: Utilized resource windfalls as an instrumental variable to analyze the effect of local public
expenditure on municipal human resources, local procurement, individual labor market participation
in the formal and informal sectors, and household welfare in Peru, using both administrative records
and survey data.

Main findings: Resource windfalls increased municipal expenditures, leading to new investments in
infrastructure and the hiring of mostly lower-skilled workers in public employment. This resulted in
greater employment earnings and lower informality, particularly among women and individuals with
lower levels of education. It also had a positive effect on the real economy, increasing total income.



 Eggtimer 1: Preferences, Politics, Policy & Policymakers

Mahvish Shaukat (World Bank)
Citizens Preferences for Direct vs Indirect Taxation: Balancing vertical vs horizontal equity (joint
with Pierre Bachas, Christopher Hoy, and Anders Jensen)

Topic: Preferences for direct vs indirect taxation and their implications for equity for self-employed
and employed individuals.

Approach: Conducted an online survey experiment in five middle-income countries to assess
perceptions of fairness in the tax system and tax policy preferences, focusing on the inequity in tax
contributions between employed and self-employed workers.

Main findings: Found that the information provided made respondents more likely to view this
difference as unfair and to prefer consumption taxes over income taxes, especially among employed
workers in higher income deciles.

Andrea Lopez-Luzuriaga (Universidad del Rosario, Colombia)
Reducing the Political Cost of Reforms. Does the Pace and Depth Matter? (joint with Andres Barinas-
Forero, Mariana Blanco and Carlos Scartascini)

Topic: The impact of the pace and anticipation/information of reforms on their political costs.

Approach: Explored through a lab experiment how the approach to implementing reforms, and
specifically varying the pace and the information that is provided about the changes, affects
compliance rates.

Main findings: Found that receiving information about the reform increases the compliance rates by
5 percentage points but the pace of reform did not have a significant effect on compliance.

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Giulia Mascagni (Institute of Development Studies and International Centre for Tax and
Development)
The Human Factor in Tax Compliance: Taxpayers’ Experiences of Interaction with Tax Officials (joint
with Naphtal Hakizimana, Denis Mukama, Fabrizio Santoro, and Celeste Scarpini)

Topic: Investigating the impact of tax officials' attitudes and behaviors on taxpayer compliance and
perceptions in Rwanda.

Approach: Involved focus group discussions with taxpayers, interviews with tax officials, and a survey
of 1,000 taxpayers. It also included a randomized control trial using vignettes to explore the effects
of distinct types of interactions with tax officials on taxpayer perceptions.

Main findings: Found that interactions with tax officials significantly affect taxpayer perceptions and
experiences. Vignettes depicting enforcement-oriented interactions increased the perception of tax
officials as aggressive and decreased respect towards them, while facilitative interactions improved
fairness perceptions. Highlighted the importance of the human factor in tax compliance, indicating
the varied impacts of tax official types on taxpayer attitudes and compliance.

Bluebery Planterose (Paris School of Economics and the École Normale Supérieure)
Fighting Climate Change: International Attitudes toward Climate Policies (joint with Antoine
Dechezleprêtre, Adrien Fabre, Tobias Kruse, Ana Sanchez-Chico, and Stefanie Stantcheva)

Topic: Investigates global attitudes toward climate change and various climate-related policies.

Approach: Conducted a large-scale international survey with over 40,000 respondents from 20
countries, analyzing attitudes to climate change and related policies. Also explored factors that shape
support for action.

Main findings: Found widespread acknowledgment of climate change as an important problem and
broad support for climate action. Support for specific policies like carbon taxes varied significantly
based on perceived effectiveness, distributional impacts, and personal financial impact. The use of
revenue generated from climate policies plays a substantial role in public support, with policies
needing to be effective and distributionally progressive to gain wider acceptance.



 Session 4: Fiscal Rules and Government Debt

Claudia Ruiz Ortega (World Bank)
Public Debt Limits and Expansionary Fiscal Austerity: Reallocating Credit Amid Fiscal Consolidation
(joint with Bernardo Morais, Javier Perez-Estrada, and Jose-Luis Peydró)

Topic: The impact of fiscal rules, particularly tighter debt limits, on local economies.

Approach: Explored how debt restrictions on local governments affect fiscal balances and economic
growth, focusing on how commercial banks reallocate credit between governments and firms after
debt limits are imposed.


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Main findings: Found that in more indebted states, fiscal consolidation led to spending cuts in areas
like social protection, which was associated with increases in extreme poverty. It also resulted in
higher employment, GDP growth, and lower overall poverty rates due to the reallocation of bank
credit from governments to firms, stimulating private sector growth.

Kavya Ravindranath (George Washington University)
Political Economy of Government Borrowing and Financial Crowding Out: Evidence from India (joint
with Viral V. Acharya, Rahul S. Chauhan, and Nirupama Kulkarni)

Topic: The effects of government borrowing on financial crowding out in India.

Approach: Investigated the crowding-out effects on top-rated firms due to portfolio substitution by
government-owned banks, particularly during periods of excess borrowing in election years.

Main findings: The study revealed that in states aligned with the central government, government
bond issuance increased cyclically before elections, leading to a reduction in private firm debt
issuance by local banks. This crowding-out effect was observed in both quantities (decreased private
debt) and prices (increased interest rates for private firms). There were also real effects on firms,
indicating a significant impact of government borrowing on the private sector.

Neelanjan Datta (Indian Institute of Technology Kanpur)
Fiscal Rules and Private Investment: Theory with Evidence from the Indian States
Topic: The potential of fiscal rules as a private investment stimulus policy and their welfare
consequences.

Approach: Utilized empirical estimates using firm-level data from India, exploiting the staggered
adoption of state-level fiscal rules, along with a theoretical model to understand the mechanisms
involved.

Main findings: The study posed questions about whether fiscal rules can act as a stimulus for private
investment and the welfare consequences of such rules. It combined empirical data with a theoretical
approach to generate testable predictions and analyze welfare implications.



 Eggtimer 2: The Social Contract

Oyebola Okunogbe (World Bank)
Citizens’ Support for Taxation in Africa: The Role of the Social Contract (joint with Habtamu Edjigu)
Topic: Examining the relationship between citizens' experiences of public services, perceived
fairness, and their attitudes towards taxation in African countries.

Approach: The study analyzed data from a survey of more than 116,000 respondents across 23
countries in Africa. It investigated the connection between public good provision, ethnic fairness, and
support for taxation. The research also examined the impact of the ethnic identity of national leaders
on tax attitudes and public service provision.

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Main findings: The study found that the quality and quantity of public facilities and positive perceptions
of government performance are correlated with stronger support for taxation. It also revealed that
respondents in a leader's ethnic homeland are more supportive of taxation, have access to more
public services, and hold more positive attitudes towards the government. The findings suggest a
positive relationship between citizens' experiences with public services, perceived fairness, and
acceptance of taxation, particularly in national leaders’ region of origin.

Eva Davoine (University of California, Berkeley)
Limits to State Capacity Development: Evidence from Tax Revolts under the French Ancien Régime
(joint with Igor Kolesnikov)

Topic: Exploring the relationship between tax rate differentials, enforcement stringency, and the
occurrence of tax riots in France during the Ancien Régime.

Approach: The researchers used a unique natural experiment, the salt tax under the French Ancien
Régime, and a spatial Regression Discontinuity Design (RDD) to study the semi-elasticity of tax riots
to taxation. They analyzed georeferenced data on riots and tax differentials across regional borders,
focusing on the salt tax's role in inciting tax revolts.

Main findings: Found that geographic tax differentials combined with strict border enforcement
significantly increased the probability of tax riots. The findings highlight the consequences of unfair
tax systems and the importance of designing tax systems in a fair and efficient manner to avoid civil
unrest.

Jasmin Vietz (University of Hohenheim)
Leveraging Religious Leaders to Increase Voluntary Tax Compliance: Experimental Evidence from
Tanzania (joint with Ingrid Hoem Sjursen)
Topic: Investigating the impact of religious leaders as messengers on enhancing voluntary tax
compliance in Tanzania.

Approach: Conducted a lab experiment among market traders in Dar es Salaam, Tanzania, in 2023.
The participants were divided into groups receiving information about tax benefits from either a tax
official or a religious leader. The study measured the participants' compliance in a tax evasion game,
analyzing how the provider of tax benefit information affects voluntary tax compliance.

Main findings: The study revealed that participants who received tax benefit information, especially
when communicated by religious leaders, showed higher compliance in the tax evasion game. This
suggests that religious leaders are potentially more effective messengers for promoting tax
compliance compared to tax officials and highlights the importance of the source of tax information
in influencing taxpayer behavior.

Anne Brockmeyer (Institute for Fiscal Studies and World Bank)
The Fiscal Contract Up Close: Evidence from Mexico City (joint with Francisco Garfias and Juan
Carlos Suárez Serrato)

Topic: Analyzing the impact of public investments on property tax compliance in Mexico City.

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Approach: Evaluated the effect of an infrastructure program on property tax compliance. This
program involved significant public investment in poor urban neighborhoods, aiming to improve
amenities and increase property values. The research used a randomized allocation design and
analyzed data on property tax compliance before and after the program's implementation.

Main findings: Contrary to expectations, the study found no significant impact of the infrastructure
program on property tax compliance. Despite the substantial investments and improvements in
neighborhood amenities, there was no increase in tax compliance at the property level highlighting
the complexity of taxpayer behavior.



 Eggtimer 3: Elites, Corruption and Government Effectiveness

Joana Naritomi (London School of Economics)
State Paralysis: The Effect of Compliance Uncertainty on Government Effectiveness (joint with
Gustavo Fernandes, Socorro P. Martínez, Diana Moreira, Daniel Faleiros, and Blenda Pereira)

Topic: Analyzing the effects of compliance uncertainty on health public spending in Brazil.

Approach: The research involved empirical analysis using administrative and survey data from
Brazilian municipalities. It focused on describing limited budget execution and its reasons, examining
the impact of compliance uncertainty on budget execution, and conducting a lab-in-the-field
experiment to assess the risk-effectiveness trade-off in policy choices by health department heads.

Main findings: Found that compliance uncertainty led to lower budget execution, indicating that
regulations and uncertainty in their application can affect valuable public spending and innovation in
policymaking. It also showed that such uncertainty affects both the level and type of public spending,
highlighting the need for regulatory frameworks that support effective and efficient public service
delivery.

Lazare Kovo (Emory University)
Local Governance under the Threat of Executives’ Power Fluctuations: Evidence from the Audits of
Fiscal Transfers
Topic: Investigating how political instability, specifically no-confidence votes (NCV) against local
executives, affects local governance and fiscal transfer audits in Benin.

Approach: Conducted an empirical analysis of the wave of NCV in Benin during 2016-2017. The
research focused on understanding the influence of these votes on local governance quality, with a
particular emphasis on how political instability impacts the auditing of fiscal transfers.

Main findings: The study found that targeted removal attempts of local executives, such as NCVs,
can improve governance and development outcomes. It argued that such attempts incentivize
executives, especially if voters can infer removal allegations from future governance outcomes.




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Guillermo Lezama (University of Pittsburgh)
Information About Corruption and Politicians’ Proposals
Topic: Investigating how information about corruption influences the communication strategies and
proposals of political candidates.

Approach: Conducted a study focusing on Brazilian municipalities examining how the disclosure of
information about corruption (from audits) affects the content of political platforms. The study used
data from the 2012 election, analyzing the manifestos of candidates in municipalities where audit
reports on corruption were disclosed before the election.

Main findings: The research revealed that information about corruption significantly influences
politicians' communication strategies. In municipalities with disclosed audit reports showing elevated
levels of corruption, politicians adjusted their manifestos to refer to the issues brought up in the audit
reports. It was also found that incumbents tended to use more populist rhetoric in high-corruption
areas, while challengers in low-corruption areas used less populist language.



 Session 5: Policy Reform

Wayne Sandholtz (Nova School of Business and Economics)
The Politics of Public Service Reform: Experimental Evidence from Liberia
Topic: The political implications of a randomized education reform in Liberia that raised school quality.

Approach: Examined the electoral effects of a large education reform in Liberia, which aimed to
improve school quality through a public private partnership which involved private school operators
managing government schools and receiving more teachers and funding. The research explored how
the reaction of teachers affected electoral responses.

Main findings: The reform decreased the average incumbent vote share through teachers’
dissatisfaction. In areas where the policy significantly improved test scores, it increased the
incumbent vote share.

Thomas Sattler (University of Geneva)
Policy Misperceptions Information and the Demand for Redistributive Tax Reform: Experimental
Evidence from Latin American Countries (joint with Martin Ardanaz, Evelyne Hubscher, Philip Keefer)

Topic: Understanding why individuals support tax policies that diverge from their material self-interest.

Approach: Investigated why individuals support tax policies that diverge from their material self-
interest, focusing on the role of misperception in shaping opinions about redistributive tax policies.
Researchers conducted pre-registered online surveys in eight countries and used an experimental
setup involving different VAT adjustment scenarios.

Main findings: The study found that providing information about the distributional impacts of the VAT
increases support for redistribution. However, this information had little effect on support for specific

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fiscal reforms. It concluded that voters often have misperceptions about the distributional impacts of
taxes across society, and that information about tax regressivity can increase support for
redistribution.

Guillermo Cruces (CEDLAS-Universidad Nacional de La Plata Argentina)
The Tax Compliance Effects of a Progressive Tax Reform (joint with Nicolas Ajzenman, Ricardo
Perez-Truglia, Dario Tortarolo, Gonzalo Vazquez-Bare)

Topic: The impact of a progressive tax reform on tax compliance.

Approach: Conducted a large-scale randomized control trial in a municipality in Argentina, providing
information about a recent property tax reform that altered tax rates based on property valuation. All
households received a letter about the tax reform, with treated households receiving additional
information highlighting the reform's progressivity. This design allowed the researchers to isolate the
effect of the salience of the reform's progressive nature from the impact of changes in the taxpayers'
behavior.

Main findings: The study aimed to measure the impact of increased salience of progressivity on tax
compliance. They found a minor increase in compliance rates for the treated group that benefited
from the reform.

Policy Perspective: Julian Amendolaggine (Treasury and Finance, Municipality of Tres de Febrero,
Buenos Aires)
Julian Amendolaggine discussed the collaborative efforts between academics and policymakers in
tax reforms in Tres de Febrero, Argentina. His speech emphasized the role of this partnership in
evaluating and implementing tax policy changes, especially in relation to digital transformations
necessitated by the COVID-19 pandemic. He highlighted the benefits of these collaborations, such
as providing valuable insights for both policy decisions and academic research, while also addressing
the challenges in aligning the divergent interests of politicians and academic evaluators.



 Closing Remarks

Aart Kraay (World Bank)
Aart Kraay began by stressing the importance of the research presented at the conference,
particularly for low- and middle-income countries where public goods provision is constrained by
limited revenues. He highlighted Rohini Pande's views on the necessity of political agreement for
effective reforms and the need to understand the impact of these reforms on various groups. He also
acknowledged the crucial role of researchers collaborating with tax administrations to develop
evidence-based policy solutions, praising the World Bank's efforts in reinforcing collaborations
between researchers, policymakers, and tax administrators, which has led to the building of lasting
trust and connections.

He further emphasized the relevance of these topics, linking them to the World Bank's 2023 World
Development Report on Migration, given the importance of migrants in tax payments, their need for

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social protection, and the associated benefits and costs. Kraay emphasized that the WB/IFS/ODI Tax
Conference is as an integral part of the World Bank's ongoing dialogue with its stakeholders about
the future, particularly highlighting the importance of domestic revenue mobilization as a cornerstone
for funding public goods. He concluded by expressing gratitude to all those who contributed to the
success of the Conference.




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