Impact Evaluation Brief: Malawi Tax Compliance

The initiative aims to improve government performance and service delivery in Malawi, focusing on three areas: citizen engagement, local government capacities, and decentralization under the Public Sector Reform (PSR) agenda. The LGAP activity is implemented by DAI across eight districts in Malawi, with a total of 128 markets to be assigned to four treatment groups. The study will use a two-by-two factorial design, with block random assignment based on geographic, political, and demographic covariates, market characteristics, and market characteristics. The main outcome indicators for the impact evaluation (IE) are the percentage of vendors who pay market fees, the actual revenues that district governments receive from each market, and the gap between the two, which serves as a measure of compliance. The IE will rely on data from various sources, including market vendor surveys, tax collector surveys, district council surveys, administrative data, and focus group discussions. The study aims to examine the effectiveness of two interventions: a "bottom-up" intervention aimed at increasing voluntary tax compliance by citizens and a "top-down" intervention aimed at improving government capacity to collect taxes and enforce compliance. The study will also explore causal mechanisms and explore the perceptions of vendors, tax collectors, and local government officials. The baseline data was collected between July and September 2017, and intervention activities began in December 2017, lasting about 9 months, with end results available in early 2019. The study will provide valuable insights into the most effective way to increase tax compliance in a democratizing context, which is crucial for improving government performance and service delivery in Malawi. The LGAP activity is a critical component of the USAID/Malawi's strategy to improve government performance and service delivery in Malawi. The study's findings will inform policy decisions and inform the development of effective interventions to improve tax compliance and improve government performance and service delivery in Malawi. The study's design and methodology are designed to minimize bias and ensure the accuracy of the results. The use of a two-by-two factorial design and block random assignment will help to identify the most effective interventions and explore causal mechanisms. The study's reliance on multiple data sources will provide a comprehensive understanding of the issues and challenges facing the LGAP activity.