Leveling the Tax Playing Field: Evidence from Punjab, Pakistan

Firms in LMICs often argue that complying with taxation would put them at a competitive disadvantage with respect to non-compliant competitors. We aim to experimentally vary the compliance of taxpayers’ geographic neighbors and competitors in the case of restaurants in Punjab, Pakistan, a major source of sales tax revenue for the province, and look for evidence of strategic complementarity of tax compliance decisions. In parallel, we will also do the groundwork for another study that examines the optimal allocation of taxpayers to enforcement teams (e.g. on the basis of geography or economic activity or size) in the tax administration.