Formalising informal taxation: Evidence from DR Congo

Informal taxation, often characterized by non-monetary contributions such as labor for local public goods, plays a significant yet frequently overlooked role in local public finance in developing countries. This proposal addresses the regressive nature of informal taxation in the Democratic Republic of Congo (DRC), with a focus on the labor tax (salongo). In partnership with the local administration, the project seeks to formalize salongo by introducing a biometric tracking system to record individual labor contributions and issue receipts to participants. This intervention aims to reduce inequality in the tax burden, enhance citizens' bargaining power, and improve access to local government services. Further, the project examines the broader impacts of formalization on compliance with other taxes and the accountability of local bureaucrats, contributing to a more equitable and transparent local taxation system.