Does Collecting Taxes Erode the Responsiveness of Informal Leaders? Evidence from the D.R.C

In weak states, delegating tax collection to informal leaders may raise revenue but risks undermining their responsiveness to local preferences. We investigate this tradeoff by exploiting whether city chiefs in D.R. Congo were randomly assigned to collect property taxes. To measure responsiveness, we study the other side of the social contract: chiefs’ distribution of resources in a government cash transfer program in which they had discretion over the recipients of development aid. In line with citizens’ preferences, chiefs who collected taxes allocated more program benefits to poorer households and thus made fewer inclusion and exclusion errors. They were no more or less likely to pocket benefits or allocate them to family. Across a range of measures, citizens appear to have updated positively about chiefs who collected taxes. We provide evidence that collector chiefs allocated aid to poorer households because door-to-door tax collection created opportunities to learn which households were in greatest need. The results help allay concerns about the effects of chief tax collection on local governance and highlight a synergy between the information needed by low-capacity states for taxation and for transfers.