The Tax Side of the Pandemic: Shifts in Compliance Attitudes and Perceptions in Rwanda

Figures & data

Figure 1. Timeline of crisis and data rounds.

Figure 2. Shifts in attitudes and perceptions. Notes: results based on Rwanda National Taxpayer Survey. Graphs show coefficients on round1, round2 and round3 (see Equation (1)(1) $$Y_{it}={\beta }_0+{\beta }_{1}r\mathit{ound}1+{\beta }_{2}r\mathit{ound}2+{\beta }_{3}r\mathit{ound}3+{\beta }_{4}b\mathit{income}+{\gamma }_i+{ϵ}_{it}$$(1) ) from fixed effects regressions on the relevant outcome, indicated at the top of each graph.

Table 1. Impact of the crisis on firms and policy response

		Baseline	May ‘20	Sept ‘20	Feb ‘21	Feb ‘22
1.	Firms closed due to covid-19 (%)	–	66.5	11.6	27.8	11.8
2.	Sales (USD)	5,947	892	2,544	3,181	3,485
3.	Sales (USD) if remained open	6,255	1,268	3,815	4,791	4,716
4.	Received any support (%)	–	69.8	22.4	31.7	19.2
5.	Accessed any tax relief (%)	–	41.0	8.1	25.9	29.1
6.	Accessed tax deferral (%)	–	39.3	4.6	23.6	26.8
7.	Accessed tax waiver (%)	–	2.0	1.9	0.9	0.4
8.	Accessed tax reduction (%)	–	1.3	3.3	3.1	1.9
9.	Accessed local tax relief (%)	–	23.1	4.0	7.4	11.4
	N obs	2,023	1,864	1,778	1,612	1,496

Notes: A full description of the variables reported here is available in Table A1 (Appendix). ‘Sales’ reports the average monthly sales for the full sample (row 2) and conditional on firms not closing due to COVID-19 (as shown in row 1) in the relevant survey round (row 3). Variables on whether taxpayers accessed various forms of tax relief are not additional, as they could have received multiple forms of tax relief. So the values at rows 6–9 do not have to sum up to those in row 5.

Figure A1. Confirmed cases of COVID-19 per million people in Rwanda. Source: Our world in data 2021.

Figure A2. Stringency index in Rwanda. Source: Our world in data 2021.

Figure A3. Shifts in in attitudes and perceptions: by tax relief access status. (a) Accessed tax relief. (b) Did not accessed tax relief.

Figure A4. Shifts in in attitudes and perceptions: by business closure due to pandemic. (a) Business closed due to pandemic. (b) Business did not close due to pandemic.

Figure A5. Change in solidarity one year after COVID-19 outbreak. Notes: results based on data from the Rwanda National Taxpayer Survey. Survey question reads: comparing the period before COVID and today, would you say that people are now: More likely to help each other/Less likely to help each other/About the same.

Figure A6. Change in patriotism one year after COVID-19 outbreak. Notes: results based on data from the Rwanda National Taxpayer Survey. Survey question reads: comparing the period before COVID and today, would you say that people are now: More proud to be Rwandan/Less proud to be Rwandan/About the same.

Table A1. Variables description

Variable	Survey question	Description	Baseline	Round 1	Round 2	Round 3	Round 4
Firms closed due to covid-19	What is the current status of your business?	=1 If temporarily or permanently closed by government measures or due to regulatory or operational challenges related to Covid-19	–	66.5	11.6	27.8	11.8
Self-reported revenue (USD)	How much did you sell over the last month?	Rwandan Francs amounts converted into USD	5,966	892	2,54	3,181	3,485
Received any support	In the last 2 months, have you received food, cash or any other support from the authorities or other groups/associations/ companies that you did not usually receive before the crisis?	= 1 If yes	–	69.8	22.4	31.7	19.2
Accessed any tax relief	In the last 2 months, did you experience any of the following tax relief for the formal taxes you usually pay?	= 1 If yes to any of the 3 reliefs below	–	41.0	8.1	25.9	22.9
Accessed tax deferral	In the last 2 months, did you experience any of the following tax relief for the formal taxes you usually pay?	= 1 If yes to delayed filing/paying deadlines	–	39.3	4.6	23.6	22.9
Accessed tax waiver	In the last 2 months, did you experience any of the following tax relief for the formal taxes you usually pay?	= 1 If yes to tax waiver	–	2.0	1.9	0.9	0.4
Accessed tax reduction	In the last 2 months, did you experience any of the following tax relief for the formal taxes you usually pay?	= 1 If yes to tax reduction	–	1.3	3.3	3.1	1.9
Accessed any local tax relief	In the last 2 months, did you experience any of the following relief for the local fee you usually pay?	= 1 If yes to any of the 3 reliefs as above	–	23.1	4.0	7.4	11
Unfairness	According to you, is the following statement true or false: The tax system is unfair.	= 1 If true	16.7	15.4	15.6	25.8	16.1
Trust	How much trust or mistrust do you have that the RRA acts in the interest of taxpayers like you.	= 1 If a lot of trust or some trust	83.3	80.3	88.7	86.9	87.1
Financial constraints	Which of the following statements is closest to your view? Statement 1: Taxpayers should always declare their full income for tax purposes, regardless of their financial constraints. Statement 2: Taxpayers in financial distress could declare less income in order to pay a smaller tax.	= 1 If yes to statement 2	27.6	23.8	24.1	25.8	20.5
Conditional / unconditional compl.	Statement 1: Taxpayers must pay their taxes to the government, regardless of the quality of public services. Statement 2: Taxpayers could refuse to pay taxes if they are not receiving public services of adequate quality.	= 1 If yes to statement 2	19.6	25.7	28.4	25.7	26.4
Never Justify	Please tell me for following statement whether you think it can always be justified, never be justified, or something in between. The range goes from 1 (never justified) to 5 (always justified): Some people not paying the taxes on their income.	= 1 If never justify	90	85.2	4.0	86	87.4

Table A2. Changes in tax attitudes over time, fixed effects estimation

	(1)	(2)	(3)	(4)	(5)	(6)
	Unfairness	Trust	Never justify	Cond. Compl.	Uncond. Compl.	Fin. constraints
May ’20	–0.13***	–0.04**	0.05***	0.10***	–0.10***	–0.05**
	(0.02)	(0.01)	(0.01)	(0.02)	(0.02)	(0.02)
September ’20	–0.12***	0.03**	–0.01	0.12***	–0.12***	–0.00
	(0.02)	(0.02)	(0.01)	(0.02)	(0.02)	(0.02)
January ’21	–0.10***	0.01	0.01	0.06***	–0.06***	–0.02
	(0.02)	(0.02)	(0.01)	(0.02)	(0.02)	(0.02)
January ’22	–0.12***	0.02	0.03	0.05***	–0.05***	–0.07***
	(0.02)	(0.02)	(0.01)	(0.02)	(0.02)	(0.02)
Monthly sales	Yes	Yes	Yes	Yes	Yes	Yes
Baseline Y	0.26	0.83	0.85	0.20	0.80	0.28
R-sq.	0.023	0.011	0.006	0.009	0.009	0.004
Observations	8383	8697	8703	8420	8420	8401

Notes: ^*p < 0.10; ^**p < 0.05; ^***p < 0.01. Results based on Rwanda National Taxpayer Survey. Columns show coefficients on round1, round2, round3, and round4 (based on Equation (1)(1) $$Y_{it}={\beta }_0+{\beta }_{1}r\mathit{ound}1+{\beta }_{2}r\mathit{ound}2+{\beta }_{3}r\mathit{ound}3+{\beta }_{4}b\mathit{income}+{\gamma }_i+{ϵ}_{it}$$(1) ) from fixed effects regressions on the relevant outcome, indicated at the top of each column. Results correspond to the ones reported in Figure 2.