Suppose now the World Bank (WB) is interested in whether the government can raise tax collection by increasing the number of offices of the Rwandan Revenue Authority (Rwanda's equivalent of the IRS). They hypothesize that having a tax office close to businesses would make the business more likely to truthfully remit their tax obligations for two reasons: 1) businesses are reminded of tax obligations whenever they see the tax office building, and 2) tax officers might be more knowledgeable about business located physically close to them.
The WB decides to test whether reducing the distance from a tax office increases tax compliance by looking at the difference in payment rates of businesses currently in areas close to the tax office and those in areas further away. The payment rate is defined as the share of businesses who remit tax payments among all businesses that are supposed to remit.
Let D = Difference between the payment rate among businesses currently within 10 km of a tax office and payment rate of businesses currently over 10km away from a tax office. Which of the following statements is true - select all that apply.
a. D is the causal impact of being located within 10 km of a tax office on payment rate.