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Abstract
What drives ineffective tax collection in developing countries? This widespread phenomenon has been explained by weak ‘state capacity’, rent-seeking bureaucrats, or the influence of political elites. More recently, scholars have also emphasised the role of ‘moral economies’, shared notions of what constitutes fair and legitimate taxation that prevent tax collectors from strictly enforcing the law. However, the literature has thus far missed the ways in which shared notions of what constitutes fair work and employment in the tax administration affect collection. Drawing on two years of fieldwork in Egypt, including ethnographic research among street-level tax collectors, the article finds that the simultaneous persistence and disappointment of historical expectations and feelings of entitlement to a white-collar, middle-class job renders tax collectors unwilling to carry out vital enforcement tasks, and further impedes the building of administrative capacity. Furthermore, the administrative leadership’s buying-into such narratives hollows out its capability to incentivise tax collectors to change their ways. These findings have important implications for our understanding of the micro-foundations of governance and state capacity, underscoring the role of normative-ideational factors not only in shaping the willingness of taxpayers to pay taxes, but also of tax collectors to collect them.
Acknowledgements
I would like to extend my warm thanks to the Centre d’Études et de Documentation, Économiques, Juridiques et Sociales in Cairo, Egypt, and in particular to their head and former head respectively, Karine Bennafla and Bernard Rougier, for hosting me during my time in the field. I am also very appreciative of funding support by the Cusanuswerk foundation and the LSE Middle East Centre. I am further extremely grateful to numerous people who have commented on earlier outputs of this research project and/or this article, in particular Steffen Hertog, Catherine Boone, Steven Heydemann, John Chalcraft, Portia Roelofs, the participants of a “Normative Politics in Africa” workshop series at LSE and Oxford University, Geoffrey Swenson, Jonathan Weigel, J. Robert Basedow, Max Gallien, Kate Meagher, Ryan Sailor and my panel at the 2018 Annual Meeting of the American Political Science Association. I also wish to thank the Department of International Development at LSE and in particular Jean-Paul Faguet and Ken Shadlen for their support. Finally, I thank three anonymous reviewers for their insightful comments.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. If we run a simple multivariate regression using GDP per capita (PPP), the share of external rent, literacy rates, the level of democracy, perceived corruption levels, and the share of agriculture in the GDP, Egypt’s tax-to-GDP ratio is 0.6 standard deviations lower than the model would predict. Own calculations using the International Centre for Tax and Development (ICTD) Government Revenue Dataset as well as the Quality of Government Dataset (Prichard, Cobham, & Goodall, Citation2014; Teorell et al., Citation2019).
2. The tax effort is the ratio of the actual tax collection to predicted collection (typically calculated using various socio-economic indicators).
3. Data for developed countries: (OECD, Citation2011, pp. 67–68) and for Egypt own interviews (2013-2014).
4. Thomas Bierschenk calls these historical processes of bureaucratic continuity and change ‘sedimentation’ (Bierschenk, Citation2014, p. 213).
5. Formally, Nasser did not assume leadership until he became president of the republic in 1954. However, Nasser had been the leader of the Free Officers who perpetrated the bloodless coup which overthrew the monarchy on 23 July 1952.
6. Interview with tax collector 3 and group 1 of tax collectors, 4 February 2014. Between 2013 and 2015, after a few years on the job, an average tax worker can expect to make about 2,000 to 3,000 Egyptian pounds (LE) a month (about US$300-US$400 at the time). After about 15 years of service, a salary of about LE4,000 a month was possible. Egypt’s national statistics institute CAPMAS does not publish median salary figures for civil servants, only averages distorted by the inclusion of the often highly paid managerial class. One can estimate that during the same time period a significant part of rank-and-file civil servants earned salaries between the minimum wage (LE1,200 per month) and about LE2,000 a month, or roughly US$150 and US$275 dollars a month respectively.
7. There are two tax administrations because until 1937, Egypt was bound by the Capitulations which made income taxation of most foreigners contingent on the approval of European powers. Since the latter was not granted, governments also refrained from imposing such taxes on Egyptians. Only after their abolition was Egypt able to create income taxes and opted for a dedicated administration.
8. Interview with tax collector 12, 19 August 2015.
9. The current Egyptian president Abdel Fattah el-Sisi grew up in this neighbourhood.
10. Interview with tax collector 5, 8 July 2014.
11. Interview with tax collector 2, 29 May 2014.
12. Interview with tax collectors 7 and 8, May 2014; Interview with tax collector 9, January 2014.
13. Interview with tax collector 3, 22 February 2014; Interview with tax collector 2, 10 July 2014.
14. Interview with tax collector 5, 8 July 2014; Interview with tax collector 3 and group 1 of tax collectors, 4 February 2014.
15. Interview with tax collector 2, 10 July 2014, Interview with tax collector 3, 22 February 2014.
16. ‘Protests of Haram and Faisal sales tax workers after decision to move to Monib’, 25 November 2015, http://www.masrawy.com/News/News_Egypt/details/2015/11/25/702190/احتجاج-العملين-بمأمورية-ضرائب-مبيعات-فيصل-والهرم-بعد-قرار-نقل-للمنيب (in Arabic).
17. This idea is again not exclusive to Egyptian tax collection but has been observed in other regional contexts and realms of state-society relations (Bierschenk, Citation2014; Lentz, Citation2014).
18. Internal letter from the tax commissioner on the merger of the general and sales tax departments into the Egyptian Tax Authority, January 2007, http://www.ltc.gov.eg/pdf/message.pdf. Own translation.
19. Interview with tax collector 14, 27 September 2015.
20. Over the course of my field work I visited about five or six buildings of various tax administrations, most of them in Cairo, but also one in Ismailia.
21. Interview with tax collector 2, 10 July 2014.
22. Interview with tax collector 2, 10 July 2014.
23. Interview with tax collector 13, 26 August 2015.
24. Interview with tax collector 15, 29 August 2015.
25. Interview with tax collector 2, 10 July 2014.
26. Interview with tax collector 10, 13 August 2015.
27. Interview with tax collector 2, 10 July 2014.
28. Interview with former minister of Finance, 1 March 2017.
29. Tax collectors 17 and 10, recorded on: ‘Head of the sales tax union: the ministries of finance and planning sow division between the people and the government’ (translated title), Masr El Arabiya, 15 August 2015 (https://www.youtube.com/watch?v=2NekEBZbJy4).
30. ‘Tax authority employees protest civil service law’, Al Ahram Online, 10 August 2015 (https://www.youtube.com/watch?v=uQXmJvddj6g).
31. ‘Tax collector from Abdin exposes irregularities in the ETA’, Sawt el Umma, 2 February 2015 (https://www.youtube.com/watch?v=TD_ZqTgMB2A&spfreload=10).
32. ‘With documents: “90 minutes” opens the file of the waste of millions because of tax evasion’ (translated title), 90 Minutes, El Mehwar, 11 June 2015 (https://www.youtube.com/watch?v=pQxgPr8EUlc).
33. ‘Tax collectors: We suffer from low salaries and many left for the private sector’, El Watan, 18 October 2018 (https://www.elwatannews.com/news/details/3726337).
34. Interview with tax collector 2, 10 July 2014.
35. Interview with consultant 1, May 2010.
36. Interview with tax collector 2, 10 July 2014, Interview with tax collector 3, 22 February 2014.
37. Practical norms are ones that are neither official (laws, rules, regulations) nor social (societal norms, conventions) norms, but describe the divergence between official norms and the reality of concrete practice in everyday life, that is between what should happen if the official rules were followed and what happens in reality.
38. Interview with tax collectors 1 and 2, 10 July 2014; Interview with tax collector 3, 22 February 2014; Interview with tax collector 5, 8 July 2014.
39. The civil service reform passed in October 2016 intended to reverse this ratio.
40. Interviews with employees of the ETA in Yqeen news report on a tax workers’ conference entitled ‘The Tax Authority between Theory and Practice’, published on 12 March 2015 (https://www.youtube.com/watch?v=0-ZAEtF9chg). Own translation.
41. Interview with tax collector 3, 22 February 2014.
42. The ancient Roman publicani or publicans were officials to whom, amongst other duties, the collection of many taxes were contracted out. I use the term here to simply mean ‘tax collector’.
43. Final Report, Technical Assistance for Policy Reform II, 20 January 2011.
44. Detailed Guidelines for Improved Tax Administration in Latin America and the Caribbean, August 2013.