Reproducibility package for Trade-offs in the Design of Simplified Tax Regimes: Evidence from Sub-Saharan Africa

This paper provides novel evidence of the trade-offs policymakers face when designing simplified tax regimes for small businesses. Firstly, it provides a comprehensive stocktaking of the main features of these regimes across Sub-Saharan Africa: they are adopted by two-thirds of countries, but their design varies greatly. Secondly, it draws on administrative and survey data from Kenya to thoroughly examine a specific simplified tax regime. This analysis shows most small businesses lack knowledge about design features, such as the existence of a minimum exemption threshold, but they react strongly to increases in tax rates by lowering their declared turnover. Finally, it presents the results of an experiment testing an alternative design of a simplified tax regime that aims to better balance the trade-offs facing policymakers. This shows that providing simple guidance about how much small businesses with similar characteristics typically pay in tax can increase revenue, but this reduces equity among taxpayers.