Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors

Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors. Asim Ijaz Khwaja, October 1, 2014, Paper. "Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if taxpayers face undue pressure from collectors. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan into one of three performance-pay schemes or a control. After two years, incentivized units had 9.3 log points higher revenue than controls, which translates to a 46 percent higher growth rate. The scheme that rewarded purely on revenue did best, increasing revenue by 12.8 log points ..."