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Experiment Shows Public Engagement Can Increase Tax Revenues

As public engagement practitioners, many of us have talked with public officials who want to know how engagement will improve a municipality’s bottom line. That’s why we appreciated NCDD member Tiago Peixoto‘s recent blog post on the first experimental – not just observational – evidence that our work can help cities collect more taxes. We encourage you to read Tiago’s post below or find the original here.

You can find the paper on the experiment by clicking here. There are caveats in the findings, but we hope this new evidence will help you strengthen your case with hesitant officials the next time you’re pushing for engagement.


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New Evidence that Citizen Engagement Increases Tax Revenues

Quite a while ago, drawing mainly from the literature on tax morale, I posted about the evidence on the relationship between citizen engagement and tax revenues, in which participatory processes lead to increased tax compliance (as a side note, I’m still surprised how those working with citizen engagement are unaware of this evidence).

Until very recently this evidence was based on observational studies, both qualitative and quantitative. Now we have – to my knowledge – the first experimental evidence that links citizen participation and tax compliance. A new working paper published by Diether Beuermann and Maria Amelina present the results of a randomized experiment in Russia, described in the abstract below:

This paper provides the first experimental evaluation of the participatory budgeting model showing that it increased public participation in the process of public decision making, increased local tax revenues collection, channeled larger fractions of public budgets to services stated as top priorities by citizens, and increased satisfaction levels with public services. These effects, however, were found only when the model was implemented in already-mature administratively and politically decentralized local governments. The findings highlight the importance of initial conditions with respect to the decentralization context for the success of participatory governance.

In my opinion, this paper is important for a number of reasons, some of which are worth highlighting here. First, it adds substantive support to the evidence on the positive relationship between citizen engagement and tax revenues. Second, in contrast to studies suggesting that participatory innovations are most likely to work when they are “organic”, or “bottom-up”, this paper shows how external actors can induce the implementation of successful participatory experiences. Third, I could not help but notice that two commonplace explanations for the success of citizen engagement initiatives, “strong civil society” and “political will”, do not feature in the study as prominent success factors.  Last, but not least, the paper draws attention to how institutional settings matter (i.e. decentralization). Here, the jack-of-all-trades (yet not very useful) “context matters”, could easily be replaced by “institutions matter”.

You can read the full paper here [PDF].

You can find the original version of this DemocracySpot blog post at http://democracyspot.net/2015/01/07/new-evidence-that-citizen-engagement-increases-tax-revenues.

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Roshan Bliss
An inclusiveness trainer and group process facilitator, Roshan Bliss serves as NCDD's Youth Engagement Coordinator and Blog Curator. Combining his belief that decisions are better when everyone is involved with his passion for empowering young people, his work focuses on increasing the involvement of youth and students in public conversations.

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