Shortly after writing my last post, my host here in London asked me whether there is any real evidence for the popular claim that states who do not tax their citizenry will not be held accountable by them.

My flippant response: shamefully little.

Jeannie and I are stopping over in London on our way back to the US. We’re staying with close friends, one of whom is a director at DFID who, among other things, is responsible for assessing the effectiveness of Britain’s foreign assistance.

His concern, and mine, is that vast inflows of aid discourage government accountability to their citizens, and hence undermine local institutions–the very arguments made by Mwenda and van de Walle that I noted in my last post.

The fact is neither side on this debate has sufficient evidence to convince. In my mind, this means that claims such as Mwenda’s are well-taken but potentially premature.

The claims made by Sachs, Bono, and the rest of the “quintuple aid now” crew, however, are downright dangerous and irresponsible. I strongly believe aid should follow a principle of “do no harm”, meaning that the burden of proof lies on Sachs and company to demonstrate they are not distorting incentives and actions in the countries that are to receive their largesse.

To those concerned with aid’s deleterious effects, the belief is common that taxation is a necessary, or at least crucially important, ingredient in accountable and effective states, and that by eliminating the need to tax, state institutions are undermined.

This conviction strikes me as plausible. It also strikes me as a bubble just waiting to be burst.

Take a look at northern Uganda, where nary a tax has been paid for generations. The people I spoke to have extremely high expectations of their government, and are extremely conscious of its limitations, in spite of not paying into the national pot themsleves. What they too often lack is a tool to exercise that voice. Yet I find it hard to believe that the optimal tool would be the ability to withhold taxes.

What do Ugandans do? They vote, often in large numbers, and past elections have been close affairs. They protest. They shame. They investigate. They seek arrests. They become leaders themselves. The tools available to the poorest and most vulnerable are few, but are potentially impotant. A huge unexplored area of research is what strategies other than taxation are used by the citizenry to hold their governments accountable. It is one I hope to explore in experimental evaluations in the future.

Meanwhile, I am unaware of much evidence for the taxation story. In fact there are several patterns that seem inconsistent with the story. For instance, within a state, students pay the least taxes of all but are often the most active and outspoken. I find the taxation story plausible, but await more evidence.

Unfortunately, it seems that my host has just used my flippant response to tell his colleagues to forget about pushing states to raise their taxes. I suggested we first start a study to see. A donor agency basing their decisions on real data? He found the idea very quaint.