Tax Salience: Experimental Evidence from Tanzania
A new article in International Tax and Public Finance examines how the salience of taxes affects the use of mobile money in Tanzania.
In “Tax Salience: Experimental Evidence from Tanzania” Odd-Helge Fjeldstad, Sunniva Nygård Ingholm, Lucas Katera, Emil Løstegård, Ingrid Hoem Sjursen, Vincent Somville, and Jasmin Vietz study how reminders about existing mobile money taxes influence financial behavior. Drawing on a lab experiment with small business owners in Dar es Salaam, the authors randomly vary whether participants are reminded of a tax when choosing between receiving payments in cash or through mobile money.
The findings show that increasing the salience of the tax significantly reduces the share of participants choosing mobile money over cash transactions. Evidence from a post-experiment questionnaire further indicates that participants were already well informed about the tax, suggesting that the effect is driven by salience rather than lack of knowledge.
Taken together, the study provides new insight into how tax design and public attention to taxation can shape financial behavior and the use of digital payment systems.