Taxing Clients: The Politics of Local Taxation in Benin

Abstract

Developing countries often lack the strong state apparatus necessary to detect, punish, and deter tax evasion. Given their limited capacity for coercion, how can they convince their citizens to pay the taxes needed to fund critical public services? This dissertation shows how the reliance on clientelism (the promise of targeted goods in exchange for political support) constrains leaders’ ability to convince citizens to pay taxes. My setting is a sample of cities in Benin, a clientelist West African democracy that struggles to collect municipal tax revenue from its citizens. Across these cities, I find that when politicians promise to reward citizens for their votes, they create real expectations for differential treatment after elections: those who voted for the winning mayoral candidate expect to be favored, while those who did not vote for the mayor expect neglect. These political expectations encourage mayor supporters to pay more in taxes, while non-supporters prefer to withhold payments. However, politicians cannot capitalize on the positive expectations of their supporters because these voters also expect to be shielded from the consequences of tax evasion. I use survey analysis, experimental evidence, and qualitative interviews with bureaucrats, elected officials, and tax collectors in Benin to show that overreliance on clientelism as a winning electoral strategy constrains political elites’ ability to implement and enforce tax policy.