Fourteenth International Conference on Interdisciplinary Social Sciences

Abstract

A key determinant of taxation is a state’s bureaucratic capability to implement and collect tax. Many developing countries have failed to develop this capacity, which has seen public sector reform being embarked upon in the past several decades. However, these, often donor-driven, reform attempts in weak states have generally failed. Nevertheless, occasionally some organizations are highly effective in these weak contexts. Why do these ‘pockets of effectiveness’ develop? This paper examines this question by looking at the Sindh Revenue Board (SRB), a successful provincial tax organization in Pakistan, a country whose tax-to-GDP ratio is the second lowest in South Asia. In this context of generally poor performance, one provincial tax agency performing well presents a puzzle. I explore why the SRB became a pocket of effectiveness by using insights from semi-structured interviews with civil servants along with data from a World Bank survey of civil servants in Pakistan. The findings suggest that its effectiveness is a consequence of its organizational attributes, notably its culture and personnel autonomy. Furthermore, it developed these attributes because of its political context. Specifically, I suggest that the politics of federalism in Pakistan created the incentives for the provincial political leadership to develop this pocket of effectiveness. This paper adds to the broader literature on center-province relations, public sector reform, as well as the limited literature on pockets of effectiveness. The latter is particularly important because we know much more about what doesn’t work than what works in weak states, and this could inform future reform.