State Agents, Not Market Brokers, Boost Tax Compliance in Lagos

Why This Question Matters

Tax collection is a persistent challenge in low-income countries. Jessica Gottlieb and Adrienne LeBas ask whether weak states should lean on existing non-state actors—like marketplace associations that both extract revenue and deliver services—or invest in direct state fiscal capacity to improve tax registration and payments.

Field Experiment in Lagos Markets

Gottlieb and LeBas ran a randomized field experiment with market vendors in Lagos, Nigeria. Vendors were randomly assigned to receive tax appeals delivered either by state representatives or by representatives of marketplace associations (local social intermediaries). Outcomes included vendor registration with tax authorities and actual tax payments following the appeals.

What the Methods Reveal

• Random assignment of messages isolates the effect of who delivers the appeal (state vs. non-state) on taxable behavior.
• The design also allows assessment of whether messenger trust and perceived credibility explain any differences in compliance.

Key Findings

• Appeals delivered by marketplace associations—the relevant non-state social intermediary—did not increase registration or tax payments, even where these intermediaries enjoyed higher trust and perceived credibility.
• Messages delivered by state agents were sometimes effective at increasing registration and payments, with stronger effects observed among ethnic minority vendors.
• The results suggest that messenger identity matters in uneven ways across population subgroups: trusted intermediaries do not automatically translate trust into fiscal compliance.

What This Means for Policy and Theory

The study underscores the complex role of social intermediaries in the social contract: they can facilitate local governance in many domains, but they do not necessarily substitute for state authority in raising revenue. For policymakers, the findings caution against assuming that delegating tax collection to trusted local organizations will reliably boost compliance; for scholars, the results highlight heterogeneity in how different groups respond to state signals.

Who Did the Work

This evidence comes from Jessica Gottlieb and Adrienne LeBas and is reported in the British Journal of Political Science (BJPS), providing causal evidence on messenger effects in tax compliance in an African urban market setting.