The Price of Simplicity: Skewed and Regressive Taxation in Accra’s Informal Sector
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2024
- Subjects: To be catalogued
- Language: English
- Type: text , book
- Identifier: http://hdl.handle.net/10962/478073 , vital:78152 , ISBN , DOI: 10.19088/ICTD.2024.044
- Description: 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 dataset of 2,700 informal enterprises in the Accra metropolitan area, we explore the nature and impact of taxation in the informal sector. We find that the majority of informal sector operators pay a range of taxes and fees, which together amount to a significant burden, especially for low earners. These payments are skewed and regressive. Two additional findings emerge in relation to the structure of these taxes. First, the incidence and burden of tax payments is strongly correlated with visibility to the state. Second, taxes and fees are highly regressive, with lower-earning operators paying significantly more in relation to their earnings. These findings have important implications for 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 provides both an estimation of this ‘price’, and an underlying argument for collecting this kind of data on taxation of informal enterprises in order to assess real policy impacts.
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- Date Issued: 2024
The crisis is far from over for informal workers: we need an inclusive recovery for the majority of the World’s workforce
- Authors: Reed, Sarah O , Rogan, Michael , Grapsa, Erofili , Ismail, Ghida , Valdivia, Marcela
- Date: 2021
- Subjects: To be catalogued
- Language: English
- Type: text , book
- Identifier: http://hdl.handle.net/10962/478051 , vital:78150 , ISBN , https://www.wiego.org/resources/COVID-Global-policy-insights
- Description: In The Crisis is Far from Over for Informal Workers — We Need an Inclusive Recovery for the Majority of the World’s Workforce, WIEGO presents the key findings and policy recommendations from Round 2 of the WIEGO-led COVID-19 Crisis and the Informal Economy study. In mid-2021, WIEGO and its partners re-interviewed 1,391 Round 1 respondents (87.5% of the sample) and 213 new respondents (13.3% of the sample) to measure the longer-term impacts of the pandemic on livelihoods for domestic workers, home-based workers, street vendors and waste pickers in 11 cities. Key findings from Round 2 are: Most respondents have not recovered the ability to work. The average number of days worked per week was only 4 in mid-2021, still considerably lower than 5.5 in the pre-COVID period. Earnings for informal worker respondents are still far below their pre-pandemic levels. By mid-2021, the typical worker was only earning 64% of their pre-COVID earnings. Four in every ten (40%) domestic workers, street vendors and waste pickers were still earning less than 75% of their pre-COVID earnings in mid-2021. Home-based workers remain the hardest-hit sector, by far. In mid-2021, typical earnings of this group were only 2% of pre-pandemic levels, reflecting the depth of devastation in this predominantly female sector. Food insecurity threatens urban workers. Nearly one-third of respondents in mid-2021 said an adult and/or child in their household had gone hungry over the last month. 57% reported challenges with dietary diversity and/or skipping meals. Relief access is not improving and may be in decline. Access to government cash support stagnated and the percentage of respondents who received food support declined since the first three months of the pandemic. The percentages of workers who received forgiveness of rent, utilities and/or school tuition were in the single digits.
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- Date Issued: 2021