Increasing tax collection is an area of focus the world over. In Pakistan, tax collection, and property tax in particular, is a substantial issue even relative to other developing countries. Property tax collection in Punjab is roughly a fifth of the level of developing countries (World Bank 2006). For the past 5 years, the Excise and Taxation Department (E&T) Punjab has been working with the Centre for Economic Research Pakistan (CERP) and its team of international researchers from Harvard University, London School of Economics and M.I.T. in order to improve performance tax collection. The collaboration so far focused on two distinct projects, namely the Performance Pay Project and Merit-Based Transfers and Posting Project, that were designed to improve tax collector performance by introducing performance based human resource (HR reform).
Outcome and Policy Impact
There are wide-ranging policy benefits that are likely to accrue from this project. The question of what determines taxpayer morale and whether to better establish connections between service provision and tax payments is not only incredibly important to understand to help improve tax collection but also gets at the more fundamental social compact relationship between the citizen and the state whereby the citizen pays taxes in expectation of benefits and services received from the state.
More broadly by examining impacts on outcomes beyond tax payments, such as citizen attitudes and views on the state and political engagement, the project stands to have wide-ranging policy benefits. Should the impacts be substantial it will also pave the way for powerful reforms in the E&T department and other tax departments that can help improve citizens’ willingness to pay and raise taxpayer morale.