Papers under review

The price of simplicity: Selective and regressive taxation in Accra's informal sector (with Nana Akua Anyidoho, Max Gallien, and Mike Rogan) — R&R

• International and domestic policymakers have long assumed that informal economies represent an ‘untapped goldmine’ for government coffers. While recent research has highlighted that many informal businesses do pay a range of formal and informal taxes there has to date been little systematic account of their tax burdens. Using a novel and representative dataset of 2,700 informal enterprises in the Accra metropolitan area, we are able to present the first geographically representative account of the tax burdens of informal enterprises. We find that the majority of informal enterprises do pay a range of taxes and fees, which together amount to a significant burden, especially for lower-income operators. These payments are selective and regressive. First, heterogeneity in the incidence and burden of tax payments is not primarily rooted in a sense of tax morale of voluntary compliance but is instead strongly correlated with visibility to the state and with high coercion and low trust.  Second, these taxes and fees are highly regressive at the intensive margin, with lower income operators paying significantly more in relation to their income. From this emerge critical considerations about ongoing efforts to tax informal businesses in low- and middle-income countries. The regressivity of efforts to tax the informal sector is often framed as a price worth paying for simplicity – our study both provides an estimation of this ‘price’, and an underlying argument for collecting this kind of data more commonly to assess the real policy impacts.

Tax reform coalitions for urban development: The politics of property tax reform in Sierra Leone — R&R

• This article explores the possibilities and limits of reform coalitions in overcoming constraints to progressive tax reform­, drawing on the experience of recent property tax reform efforts in Sierra Leone. First, a reform coalition with international partners enabled the local government in Freetown to manoeuvre around political resistance to reform. This was possible in part by building broad-based support for the reform that made it more politically challenging to resist. Second, reform coalitions facilitated by local civil society organisations and including local governments, paramount chiefs, and the central government have recognized traditional political authority’s role as potential spoilers for reform and have in turn attempted to formalize their role in local revenue collection. The success of outcomes has depended on the balance of power between paramount chiefs and local governments, reinforcing the need to ensure that reform programmes start with a nuanced understanding of informal institutions and pluralized authority.

Catch them if you can: The politics and practice of a taxpayer registration exercise (with Max Gallien and Giovanni Occhiali)

• Tax registration drives have become an increasingly popular intervention to expand the coverage of tax nets across Sub-Saharan Africa. However, doubts have recently been casted on their impacts, as there is increasing evidence that they do not lead to substantial revenue increase and might skew the tax registry towards overrepresenting vulnerable groups. Little explanation for these outcomes is available for why this is the case, as the literature focuses on the outcomes of these exercises rather than on their processes and premises. We seek to fill this gap through an evaluation of a tax registration exercise of small and medium-sized enterprises in Freetown, Sierra Leone implemented by the National Revenue Authority. We argue that the conflicting objectives between national and international stakeholders, as well as between street- and higher-level officials, combined with a technocratic view of the exercise which underestimate its political nature, led to its likely unsatisfactory outcome in revenue terms. However, we also identify non-revenue outcomes that may still be seen as positive from the perspectives of policymakers, such as familiarising many businesses with a revenue authority they previously had very little engagement with. While this outcome of registration exercises is frequently overlooked by similar evaluations, it is one that local officials recognize as important in “building future taxpayers”.

Engendering taxation: A research and policy agenda (with Anuradha Joshi and Jalia Kangave)

• In recent years, increased attention has been paid to the gender dimensions of taxation, though there has been limited research on the subject, particularly in lower income contexts. This paper reviews the existing literature and related debates on gender and tax in low-income countries, identifying knowledge gaps, and mapping broader issues that are relevant to understanding the gendered impacts of taxation. The paper makes four broad observations.  First, there has been insufficient gender-disaggregated data analysis, which is required to draw generalizable conclusions about the gendered impacts of tax policy. First, though existing research focuses on formal direct taxes, these are less relevant for women in lower income contexts, given high participation rates in the informal economy. Instead, presumptive taxes, user fees, and informal taxes place a disproportionate burden on low-income women. Third, there needs to be greater attention paid to the ways in which women in senior and junior positions in tax administration can affect how taxpayers interact with tax authorities. Finally, any assessment of the impacts of tax policy on gender needs to consider revenues and expenditures together to ensure that the positive effects of tax policies are not undermined by budgets or vice versa. We conclude by showing that, with the few exceptions outlined above, tax policy and administration is often an unwieldy instrument to address gender equity; instead, other policies related to labour markets, social protection, and public services can target gender equity more directly.

The politics of passage: Roadblocks, taxation, and control in conflict (with Max Gallien, Peer Schouten, Shalaka Thakur, and Florian Weigand)

• From Afghanistan and Yemen and from Mali to Somalia, research shows, roadblocks are central to dynamics of armed conflict, funding insurgents, driving violence and shaping the forms of order espoused by various types of armed actors, state and non-state alike. Despite increasing evidence, roadblocks and the forms of circulation they interact with have not yet received the theoretical attention they deserve and are often overlooked in debates over what drives conflict and how we should understand order in areas of contested statehood. Our premise is that a focus on checkpoints has the potential to enrich engrained approaches to conflict and order-making because roadblocks represent a window into dynamics of authority and power that only partially follow the script of ‘stateness’ as it is usually understood: as revolving around claims to territory and the population or resources within it. This paper, which introduces the working paper series Roadblocks and revenues, argues that checkpoints constitute a distinct claim to authority with their own logic and effects on conflict dynamics and political order-making. We coin the idea of the ‘politics of passage’, which refers to the mutually constitutive struggles over movement and authority that play out at roadblocks in fragile and conflict-affected settings. We propose that attending to the politics of passage means exploring how both authority and passage—and through them trade and revenues, as well as mobility and order—are contingent on the sometimes routinised, sometimes unpredictable processes of negotiation that take place at checkpoint encounters. We provide a definition of roadblocks, explore the historicity of circulation struggles in relation to state formation, and outline a new research agenda on roadblocks, advancing debates on state-building, war economies, informal taxation, global value chains and rebel governance, offering reflections from existing research and avenues for future work.

Informal taxes fill gaps in state crisis responses: Evidence from Sierra Leone during Covid-19 (with Wilson Prichard and Nicolas Orgeira)

• Bottom-up responses to the Covid-19 pandemic have been critical in supporting some of the most vulnerable groups throughout the crisis and have often served as powerful symbols of solidarity. There has been less attention paid, however, to the implications of shifting the burdens of crisis relief and social welfare provision downward to already vulnerable populations. We explore the impact and implications of crisis-related informal tax contributions in Sierra Leone, relying on a unique dataset tracking tax contributions and taxpayer perceptions from March 2020 to February 2021. Five key findings emerge. First, in the context of negative economic impacts and the limited and uneven reach of state economic relief, more than a third of individuals paid new informal taxes to help finance the pandemic response.  Second, new informal contributions mostly went to financing preventative measures, including hand-washing stations and community sensitization, rather than social welfare or protection. Our data thus points to remaining gaps in pandemic relief and recovery, with informal bottom-up crisis responses constrained by the economic hardships facing individuals, including significant increases in poverty and food insecurity. Third, despite increases in informal taxes, overall burdens do not consistently increase, suggesting that communities pivoted their support to areas of need, rather than increasing informal fiscal burdens. Fourth, wealthier individuals were more likely to make informal contributions at the start of the pandemic, indicating some degree of progressivity, at least at the extensive margin. Finally, despite the insufficiency government pandemic relief and the prevalence of informal taxes to finance preventative measures, views of the fairness of informal taxes have been relatively positive and perceptions of overall government performance during the pandemic have been relatively high. These findings have important implications for our understandings of local perceptions of the fairness of informal financing mechanisms and broader citizen expectations of the state. 

The political economy of taxation in Somalia (with Najibullah Nor Isak)

• Somalia has the weakest tax capacity in the world. In many ways, this is unsurprising given the collapse of the state in 1991 and the instability that has followed. In this paper, however, we argue that an analysis of taxation in Somalia cannot begin with the collapse of the state, drawing attention to understudied legacies of colonialism and conflict that shape the political economic dynamics that limit the contemporary state’s capacity and will to tax. Relying on historical and qualitative interview data and applying a political settlements analysis, we argue that top-down or technocratic institutional reform will not succeed if it does not transform underlying political and social relations and informal institutions. We show how the historical legacies of colonialism, a post-conflict authoritarian regime, and civil war gave rise to informal institutions, norms, and networks that continue to undermine the state’s capacity and will to expand taxation, particularly as it relates to the business community. In this context, informal institutions of tax negotiation, the unwillingness to introduce new taxes or expand the tax base, and the forbearance of tax enforcement has a political logic that can be explained through three central mechanisms. First, the discretion and autonomy afforded by the weakness of the current system enables rent-seeking by front-line tax officials and collectors, while the broader institutionalization of informality benefits would-be corporate taxpayers. Second, the intertwining of networks among political and economic elite underpins the disincentives of senior administrative officials and politicians to extend taxation on the business community. Third, the critical role that the business community has played in enabling stability and supporting state institutions over time further limits incentives to expand business taxation.  In light of significant international investment in tax policy and administrative reform and some successes in recent years, we consider ways in which resistance to reform has been overcome in this context. We fundamentally argue that tax reform will fail unless it addresses the overarching elite bargains and political settlements that represent the greatest obstacle to reform. Concretely, reform has been possible where it has evaded the attention of would-be resisters, strengthened popular support for reform, or otherwise distributed the benefits of institutional reform. Most critically, reform has been possible where international development partners have put pressure on the government to undertake reforms, even when misaligned with the political settlement in the short-term. Though such strategies represent risks for instability and sustainability, in the longer-term they can transform underlying social relations and support the development of a more inclusive political settlement and society. In effect, international support can be used to strategically “unsettle” or reshape political settlements, increasing and broadening the number of actors with an interest in formal institutions. This analysis illustrates the value and necessity of analysing political settlements in order to deepen our understanding of what is possible in terms of institutional reform and fiscal capacity building.

Informality and taxation in markets in Kinshasa (with Yannick Bokasola, Eddy Ngwakoyo, and Gayatri Saghal)

• This paper explores the everyday realities of taxation in Kinshasa's markets, which play a crucial role in both local revenue generation and the livelihoods of the population. Understanding market taxation in this context is crucial given that formal state authority intersects with and is often embedded in informal institutions and governance structures and a plurality of state and non-state actors engage in revenue extraction. The study draws on qualitative data collected from eight formal, informal, and customary markets in Kinshasa, including through focus group discussions with market vendors, interviews with key actors involved in market governance and taxation, and ethnographic observations of tax collection and relationships between vendors and collectors. The research aimed to document the experiences of market vendors, their perceptions of taxation, and how these perceptions shape their interactions with the state and their willingness to pay taxes while also capturing differences in everyday experiences based on structural differences of market governance. Key findings reveal that market vendors are subject to multiple layers of formal and informal taxation, with a prevalence of coercive tax collection practices and informality in the administration of taxes. Correspondingly, vendors widely view market-based taxation as unfair, though some likewise report greater willingness to pay informal taxes because they see tangible benefits, such as protection from gangs. Formal taxes are perceived as offering few returns. In this context, everyday resistance to taxation is common, but given the vulnerable positions of most vendors and the limited channels for accountability, the paper finds few instances of a broader challenging of the tax systems or demands for reform.  The study also finds distinct differences in the tax collection experiences across formal, informal, and customary markets, with market taxation led by customary authorities eliciting a greater sense of fairness and voluntary compliance. These findings contribute to the broader literature on informal institutions and taxation, providing a case study of the everyday experiences of both market vendors and tax collectors and documenting the micro-level dynamics that shape tax morale, perceptions of fairness, and resistance in a context of pluralized tax and governance authority.

Taxation and gender equity in support of the SDGs (with Anuradha Joshi, Jalia Kangave, and Sripriya Iyengar Srivatsa)

• In this chapter, we consider how the tax system may contribute to gendering development and strengthening gender equity, while recognizing its limitations in doing so independent of gender-sensitive budgeting and broader underlying structural reform in society. In the next section, we identify three promising entry points for the tax system to impact gender equity. First, we discuss the importance of focusing on tax administration, not just policy reform, to improve gender equity outcomes. Second, we show that rethinking current strategies to tax the informal sector can have an important impact for women, particularly lower-income women. Third, we argue that simply focusing on progressive, “good” tax policy can have an important impact on gender equity and domestic revenue mobilization. We conclude by presenting key challenges in making the tax system work for women and suggesting future research avenues.

Works in progress

Informal revenue generation and the state: Evidence from Sierra Leone (book manuscript)

• In this project, I explore the relationship between informal tax institutions and the state. My research asks whether informal taxation contributes to or crowds out the development of more effective formal structures, and considers the conditions under which informal taxation plays a complementary or competitive role with the state. I inductively develop a theoretical framework to explore variation in the nature of relationships between informal taxing actors and the state. I show that informal tax institutions can bolster state authority and state building in unexpected ways. Informal tax institutions can act as brokers of state building, while states may use these institutions to bolster their own authority. The result is that states may seek to sustain informal processes and outcomes, even where we may expect that they would challenge the state’s legitimacy. Critically, I show that the politics of state building are in part played out in conjunction with informal institutions, forcing us to reconsider the notion and structures of statehood in practice. 

• My analysis draws on a mixed methods research design, combining a largescale survey of taxpayers; over 300 in-depth interviews with key stakeholders, including community and government leaders; over 50 focus group discussions with community leaders, chiefdom authorities, and taxpayers; the compilation of public revenue sources and handwritten informal tax records; the consultation of historical records; and ethnographic immersion over more than a year of fieldwork.  

• My dissertation, which forms the basis for this book project, was awarded the 2019-2020 Canadian Political Science Association Vincent Lemieux Prize, recognizing “the best PhD thesis submitted at a Canadian institution, in English or in French, in any sub-field of political science, judged eminently worth of publication in the form of a book or articles”. The prize jury notes that, the work “is an example of innovative research in political economy…The theoretical framework is sound, and the author manages to integrate the current literature but also brings her own contributions. It is also an excellent empirical project that includes an original survey and hundreds of interviews. It is well written but does not sacrifice sophistication to parsimony. It is also argued with rigour and clarity, and presented in a way that makes it interesting and accessible to diverse audiences in political science.”

Labour, tax, and development: Shifting norms around labour taxes from the colonial era to today 

• Informal labour taxes have a long history in former African colonies, though they have not been included in analyses of individual tax burdens and the effective revenue of labour taxes has not been recorded by formal public finance institutions. They have taken a number of forms—from conscripted labour for public works projects in the colonial era to mandated communal labour in the post-independence era—and have been integral to the expansion of state authority. I explore informal labour taxes in Sierra Leone from the colonial period to the present day. I rely on historical records, a unique dataset capturing contemporary informal labour contributions, and over a year of qualitative data collection and ethnographic immersion in nine chiefdom case studies. I trace the perceived legitimacy of informal labour taxes over time, showing how they went from being perceived as “forced labour” to being openly embraced by states and development partners. Once normalized by colonial authorities, a growing international labour movement caused them to be seen as illegitimate. Over time, however, they were reframed by the colonial state as part of “traditional” obligations, with the colonial state legitimizing and institutionalizing them in colonial law. In the post-independence period, there was continuity in the state’s engagement with informal labour taxes, which were seen as central to the “self-reliance” movement. Later shifts in development theory and praxis saw informal labour taxes as indicators of “ownership”, “participation”, and “sustainability”. Accordingly, informal labour taxes have been revived and re-legitimized by the epistemic development community. Though the relative legitimacy of informal labour taxes has shifted over time, states and development partners insufficiently appreciate the burden of mandatory unpaid labour on individuals, as well as how informal labour taxes have contributed to the expansion of state power over time.

Between God, the people and the state: Zakat (book manuscript) (with Max Gallien and Umair Javed)

Taxing the poor: Why it happens and how we stop it (book manuscript) (with Max Gallien)

The broken social contract: Coercion and credible commitment in Accra's informal sector (with Nana Akua Anyidoho, Max Gallien, and Mike Rogan)

Informal revenue generation and statebuilding in the DRC  (with Gayatri Saghal and Yannick Bokasola)

Data collection in progress

The politics and practice of zakat in contemporary Pakistan: Implications for gender, equity, and wealth taxation (with Umair Javed and Max Gallien)

Services first: Trust and taxation in Accra's informal economy (with Nana Akua Anyidoho, Max Gallien, and Mike Rogan)

Traditional political institutions, taxation and statebuilding in Sierra Leone (with Kevin Grieco)

Armed group taxation: A dataset (with Tanya Bandula-Irwin, Max Gallien, Ashley Jackson, and Florian Weigand)