The Fiscal Contract Revisited: How Taxation by Weak States Shapes Citizens’ Demand for Public Goods and Democratic Inclusion

On the basis of the experience of the industrialized world, taxation is often depicted as a key driver of state building, development, and democratization. The mechanism through which this relationship is assumed to operate is that, to be able to tax the people, governments have to offer something in return, presumably in the form of democracy and public goods. In this way, the argument about the decisive role of taxation in the development process forcefully rests on the assumption that taxation is intimately and causally linked to citizens’ expectations and demands on the state in a way that makes states that rely on taxation comparatively more likely to provide public goods and democratic institutions. More specifically, the assumption underlying the argument is that, for taxation to lead to development, two prerequisites must be fulfilled: 1) Citizens must be aware of that they are subject to taxation, and; 2) Citizens must respond to this awareness by the way of, on the one hand, a change in the expectations they hold in terms of what the state ought to do in terms of public goods provision and democracy, and, on the other hand, a resulting increased demand for public goods and democratic inclusion. Against the backdrop of that the international community now forcefully promotes taxation not only as the most sustainable revenue for states but also as a central force in the establishment of accountable state institutions, this paper asks whether taxation is in fact linked to these expected changes in citizens’ expectations and demands even in the context of the comparatively weak states of the developing world. In search for an answer, the article makes use of survey data on citizens’ experiences with taxation, and their resulting expectations and demands on the state, provided by the Afrobarometer.