Paper short abstract:

Based on a comparative cases studies approach including 10 out of the 53 municipalities in Mozambique, in this paper we analyze the effect of social and political factors at the local level on the degree to which local governments exploit their local revenue potential.

Paper long abstract:

Although increased revenue mobilization is a central element of the SDG-Agenda and everyone is aware that the success of this agenda will be decided at the local level, much of the debate on taxation and development is still concentrated on the central government level.

However, we know that in many countries in Africa there is a considerable, yet unexploited, revenue potential at the subnational level. In addition, it is foreseeable that dynamics such as urbanization will further increase this potential.

Against this backdrop, in this paper we focus on the how social and political factors at the local level influence the degree to which local governments exploit their revenue potential.

In this vein, we analyze the effect of (i) the degree of social cohesion, (ii) political competition and (iii) the alignment between the party in government at the local and the national level on the use of existing tax potential and the performance of politically and administratively particularly demanding taxes.

Methodologically, we rely on a comparative case studies approach including 10 of the 53 municipalities in Mozambique. We collect interview material with tax administration officials, mayors, local council members and civil society organizations and benefit from access to a novel dataset on disaggregated municipal revenue collection data.

The analysis reveals how municipalities governed by the opposition are more committed and successful in collecting more demanding taxes and how they are also more active in engaging with citizen to develop something that can be labelled as a municipal fiscal contract.