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Differential bunching impacts across the income distribution: Evidence from Zambian tax administrative data

Author

Listed:
  • Samuel Bryson
  • Kwabena Adu-Ababio
  • Evaristo Mwale
  • John Rand

Abstract

We investigate the behavioural responses of individual taxpayers to changes in marginal personal income tax rates applying empirical bunching methodology to tax administrative data from Zambia over the period from 2014 to 2021. We find evidence for excess bunching at the first kink in the tax schedule for all years but less evidence of bunching at the second and third thresholds. While bunching is considerable and behavioural responses are observed to changes in the location of the kinks over time, bunching at reference points ('round-number bunching') also appears large.

Suggested Citation

  • Samuel Bryson & Kwabena Adu-Ababio & Evaristo Mwale & John Rand, 2023. "Differential bunching impacts across the income distribution: Evidence from Zambian tax administrative data," WIDER Working Paper Series wp-2023-142, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2023-142
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    References listed on IDEAS

    as
    1. Emmanuel Saez, 2010. "Do Taxpayers Bunch at Kink Points?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 180-212, August.
    2. Neryvia Pillay Bell, 2020. "Taxpayer responsiveness to taxation: Evidence from bunching at kink points of the South African income tax schedule," WIDER Working Paper Series wp-2020-68, World Institute for Development Economic Research (UNU-WIDER).
    3. Pierre Bachas & Mauricio Soto, 2021. "Corporate Taxation under Weak Enforcement," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 36-71, November.
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    Keywords

    Personal income tax; Zambia; Income distribution; Tax data;
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