Outsourcing Property Tax Re-Assessments in the Greater Chennai Corporation

Impact evaluation of outsourcing property tax assessments to third-party firms under two types of contracts: a fixed fee contract and a hybrid contract (fixed fee plus performance bonus). The study will compare property tax assessments completed by third-party firms under these two contracts relative to each other and to assessments completed by tax assessors employed by the Greater Chennai Corporation (municipal corporation for the capital city of Tamil Nadu, India).

2022-11-15

2023-12-31

The primary outcomes for the study are as follows: property tax demand generated, property tax revenue collected, accuracy of assessed property values, taxpayer satisfaction. We will also study firm characteristics for all firms that submit bids for each contract, and will measure firm outcomes (including hiring practices, training practices etc.) for the firms that are eventually awarded each contract.

Outcome data on property tax demand and property tax revenues will come from administrative data maintained by the GCC. Property tax demand is defined as taxes owed based on the assessed property value. Data on accuracy of assessed property values will come from independent property surveys of a randomly selected subset of properties: surveyors will record all the characteristics used to calculate assessed values to generate an independent measure of the property value. Data on taxpayer satisfaction will come from administrative records of complaints filed by taxpayers as well as independent surveys of randomly selected taxpayers implemented by the research team. We will obtain data on all firms that submit bids for each contract from the bid forms. We will obtain additional data on firm characteristics and other outcomes (including hiring practices, training practices etc.) for firms that were awarded each contract through firm surveys implemented once all the re-asessments have been completed.

We plan to test for heterogeneous treatment effects based on the following property characteristics:
1. Residential v.s. Commercial v.s. Mixed-use properties
2. Owner-occupied v.s. Tenanted properties
3. Property size

The study will implement a randomized evaluation of two contracts for outsourcing re-assessments to third-party firms: fixed fee and hybrid fee (fixed fee plus a performance bonus, defined as a percentage of the additional tax demand generated as a result of the re-assessment). Outsourced re-assessments will also be compared to re-assessments completed by tax assessors currently employed by the GCC. Each of the 200 wards in the Greater Chennai Corporation will be randomly assigned to one of the following arms:

[T1] Outsourcing re-assessments to firms compensated with a fixed fee
[T2] Outsourcing re-assessments to firms compensated based on a hybrid contract
[C] Re-assessment by existing tax assessors (In-sourcing)

Based on a property census implemented between 2018-2022, the GCC has identified a list of under-valued and unassessed properties. During the “Study Phase”, a randomly selected subset of these properties in each ward will be re-assessed by the relevant party as described above. We will then compare outcomes across the three arms to identify the “best performing” contract. In “Scale-up Phase One”, a randomly selected subset of properties in the control wards will be re-assessed by the third-party firms. Firms will be compensated according to the terms of the best-performing contract regardless of which contract they were originally hired under. By comparing the performance of firms that selected into the fixed and hybrid contracts while keeping the contract incentives constant, we will be able to measure selection effects. Finally, in “Scale-up Phase Two”, all remaining properties identified for re-assessment will be assessed by the third-party firms compensated as per the terms of the best-performing contract.

Not available

Computer random number generator

Wards and properties.

Yes

200 wards. The GCC consists of three regions (North, Central, South), further divided into 15 zones. Stratifying by Zone x Region, each of the 200 wards will be randomly assigned to one of the following arms: Outsourcing with Fixed fee, Outsourcing with Hybrid fee, Re-assessment by government assessors (Control wards for the "Study Phase").

250,000 properties that have been identified for re-assessment by the GCC

[T1] "Study Phase" Outsourcing with fixed fee – ~66 wards
[T2] "Study Phase" Outsourcing with hybrid fee – ~66 wards
[C] "Study Phase" Re-assessment by GCC assessors – ~68 wards
For "Scale-up Phase One" and "Scale-up Phase Two", half of these wards (~34 wards) will be assigned to the firm hired under the flat fee contract and the remaining will be assigned to the firm hired under the hybrid contract.