Understanding taxpayer behaviour better – New data research collaboration in Zambia

UNU-WIDER has signed a memorandum of understanding (MoU) with the revenue authorities in Zambia, to support collecting and analysing national administrative tax data. With the help of the data, the aim is to find policy solutions to increase tax compliance and domestic revenues. Enhancing tax collection will facilitate the provision of better basic services for citizens.

The research and data work will be done in collaboration with the Zambia Revenue Authority (ZRA) and the Zambia Institute for Policy Analysis and Research (ZIPAR). The collaborative research project will run until the end of 2023.

‘We are very pleased and excited of this new collaboration, which will provide deeper academic understanding of tax administration issues and advice for policy-making. The partnership is crucial for researchers at UNU-WIDER, since the institutional knowledge and expertise at the local level are key for quality research. The project will also provide an avenue for increased operational, and institutional capacity through short- and long-term training to ZRA staff’, explains Jukka Pirttilä, UNU-WIDER Non-Resident Senior Research Fellow.

‘The increasingly complex and fast-changing business environment has made tax administration more challenging for many countries. This calls for innovative and efficient solutions that can help tax administrators better understand taxpayers’ behaviour so as to improve tax administration, reduce compliance costs and consequently improve revenue collection for sustained development. To this end, we are happy to announce the collaboration project’, says Ezekiel Phiri, Director for Research & Corporate Strategy at ZRA.

UNU-WIDER Research Assistant Kwabena Adu-Ababio (second right) visiting Lusaka in September-October 2021. With the Zambian colleagues Mashekwa Maboshe (ZIPAR), Kelvin Mpembamoto (ZRA), Ezekiel Phiri (ZRA), Mbewe Kalikeka (ZIPAR) and Laban Simbeye (ZRA)
Data for development

Tax and customs authorities collect a large amount of data on individuals and firms, that can be used for generating policy-relevant research. The data can be made securely available to researchers at a reasonable cost, and it is especially useful for a reliable analysis of the impacts of the tax system on the economy. The data collaboration will help ZRA in implementing tax reforms and improving the administrative processes.

Potential research areas under the collaboration projects will include tax compliance gap estimates, profit shifting and corporate tax avoidance, examining value-added tax (VAT) chains, and taxing of different sectors, such as extractive industries. Some of this work will be done jointly with colleagues at the University of Copenhagen. Other planned activities include an open call for research proposals, technical training, and an intensive course on tax and development.

‘This collaboration is borne out of the realisation that the validity of research results in today’s world requires concerted effort and a more complex set of methods. This partnership provides an opportunity to pool talent, share knowledge and identify strengths to everyone’s benefit’, explains Ezekiel Phiri.

Co-creation is key

UNU-WIDER already has experience in working with several tax authorities in Africa and the developing world.

‘The most important factor in this type of collaboration is co-creation — research topics and questions have been designed in collaboration. The data work will be done mostly by local experts. UNU-WIDER researchers and the wider academic community will gain new research knowledge, which in turn helps us work towards the Sustainable Development Goals, together with the decision makers and other stakeholders’, Jukka Pirttilä summarizes.

This new co-operation is part of the UNU-WIDER project Building up efficient and fair taxation. The collaboration has already started successfully in Uganda. In Zambia the co-operation covers also tax-benefit microsimulation work done under UNU-WIDER's SOUTHMOD project. Both projects are part of UNU-WIDER's programme on Domestic Revenue Mobilization (DRM). The DRM programme is financed by the Norwegian development co-operation agency Norad.