Simplified Taxation in Africa: What We Know – and Need to Know
- Gallien, Max, Hoy, Christopher, Komatsu, Hitomi, Ozer, Ceren, Rogan, Michael, Van den Boogaard, Vanessa
- Authors: Gallien, Max , Hoy, Christopher , Komatsu, Hitomi , Ozer, Ceren , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/478250 , vital:78168 , DOI: 10.19088/ICTD.2025.012
- Description: Most economic operators in Africa are small and informal firms that fall under the purview of presumptive or simplified tax regimes (STRs). These taxes are expected to fulfil a range of functions, from raising revenue to facilitating formalisation and improving revenue authorities' data, and yet their effectiveness and impact are surprisingly under-researched. Meanwhile, emerging evidence suggests that STRs often raise little revenue, disproportionately impact low-income earners, and are inconsistently applied. This policy brief summarises what we know about simplified taxes in Africa, who pays them, and why they matter, while highlighting gaps in existing knowledge. It makes the argument that there is a need for a new policy conversation on simplified taxation, and one that is data-driven and evidence-based.
- Full Text:
- Date Issued: 2025
- Authors: Gallien, Max , Hoy, Christopher , Komatsu, Hitomi , Ozer, Ceren , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/478250 , vital:78168 , DOI: 10.19088/ICTD.2025.012
- Description: Most economic operators in Africa are small and informal firms that fall under the purview of presumptive or simplified tax regimes (STRs). These taxes are expected to fulfil a range of functions, from raising revenue to facilitating formalisation and improving revenue authorities' data, and yet their effectiveness and impact are surprisingly under-researched. Meanwhile, emerging evidence suggests that STRs often raise little revenue, disproportionately impact low-income earners, and are inconsistently applied. This policy brief summarises what we know about simplified taxes in Africa, who pays them, and why they matter, while highlighting gaps in existing knowledge. It makes the argument that there is a need for a new policy conversation on simplified taxation, and one that is data-driven and evidence-based.
- Full Text:
- Date Issued: 2025
The taxed informal economy: Fiscal burdens and inequality in Accras
- Anyidoho, Nana A, Gallien, Max, Rogan, Michael, Van den Boogaard, Vanessa
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/478095 , vital:78154 , https://doi.org/10.1016/j.worlddev.2024.106879
- Description: The common assumption that informal economies are untaxed has underpinned arguments that they represent an ‘untapped goldmine’ for government coffers. However, there has been limited empirical engagement with this assumption. While some studies have highlighted that many informal businesses pay both formal and informal taxes, there has been little systematic accounting of these payments. Using a novel dataset of 2,700 informal enterprises in the Accra metropolitan area in Ghana, this article presents the first geographically representative account of the nature, distribution and impact of taxation in an urban informal sector. We find that the majority of informal sector operators in this context pay a range of taxes and fees, which together amount to a significant burden, especially for low earners. Two key findings emerge in relation to the structure of these taxes. First, the incidence and burden of tax payments is highly uneven and strongly correlated with visibility to the state, suggesting that taxation is driven more by patterns of state enforcement than the choices of informal operators. 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 both our conception of informal businesses and efforts to tax informal businesses in low- and middle-income countries.
- Full Text:
- Date Issued: 2025
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/478095 , vital:78154 , https://doi.org/10.1016/j.worlddev.2024.106879
- Description: The common assumption that informal economies are untaxed has underpinned arguments that they represent an ‘untapped goldmine’ for government coffers. However, there has been limited empirical engagement with this assumption. While some studies have highlighted that many informal businesses pay both formal and informal taxes, there has been little systematic accounting of these payments. Using a novel dataset of 2,700 informal enterprises in the Accra metropolitan area in Ghana, this article presents the first geographically representative account of the nature, distribution and impact of taxation in an urban informal sector. We find that the majority of informal sector operators in this context pay a range of taxes and fees, which together amount to a significant burden, especially for low earners. Two key findings emerge in relation to the structure of these taxes. First, the incidence and burden of tax payments is highly uneven and strongly correlated with visibility to the state, suggesting that taxation is driven more by patterns of state enforcement than the choices of informal operators. 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 both our conception of informal businesses and efforts to tax informal businesses in low- and middle-income countries.
- Full Text:
- Date Issued: 2025
The taxed informal economy: Fiscal burdens and inequality in Accras
- Anyidoho, Nana A, Gallien, Max, Rogan, Michael, Van den Boogaard, Vanessa
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/478084 , vital:78153 , https://doi.org/10.1016/j.worlddev.2024.106879
- Description: The common assumption that informal economies are untaxed has underpinned arguments that they represent an ‘untapped goldmine’ for government coffers. However, there has been limited empirical engagement with this assumption. While some studies have highlighted that many informal businesses pay both formal and informal taxes, there has been little systematic accounting of these payments. Using a novel dataset of 2,700 informal enterprises in the Accra metropolitan area in Ghana, this article presents the first geographically representative account of the nature, distribution and impact of taxation in an urban informal sector. We find that the majority of informal sector operators in this context pay a range of taxes and fees, which together amount to a significant burden, especially for low earners. Two key findings emerge in relation to the structure of these taxes. First, the incidence and burden of tax payments is highly uneven and strongly correlated with visibility to the state, suggesting that taxation is driven more by patterns of state enforcement than the choices of informal operators. 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 both our conception of informal businesses and efforts to tax informal businesses in low- and middle-income countries.
- Full Text:
- Date Issued: 2025
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2025
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/478084 , vital:78153 , https://doi.org/10.1016/j.worlddev.2024.106879
- Description: The common assumption that informal economies are untaxed has underpinned arguments that they represent an ‘untapped goldmine’ for government coffers. However, there has been limited empirical engagement with this assumption. While some studies have highlighted that many informal businesses pay both formal and informal taxes, there has been little systematic accounting of these payments. Using a novel dataset of 2,700 informal enterprises in the Accra metropolitan area in Ghana, this article presents the first geographically representative account of the nature, distribution and impact of taxation in an urban informal sector. We find that the majority of informal sector operators in this context pay a range of taxes and fees, which together amount to a significant burden, especially for low earners. Two key findings emerge in relation to the structure of these taxes. First, the incidence and burden of tax payments is highly uneven and strongly correlated with visibility to the state, suggesting that taxation is driven more by patterns of state enforcement than the choices of informal operators. 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 both our conception of informal businesses and efforts to tax informal businesses in low- and middle-income countries.
- Full Text:
- Date Issued: 2025
The Price of Simplicity: Skewed and Regressive Taxation in Accra’s Informal Sector
- Anyidoho, Nana A, Gallien, Max, Rogan, Michael, Van den Boogaard, Vanessa
- 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.
- Full Text:
- Date Issued: 2024
- 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.
- Full Text:
- Date Issued: 2024
Mobile money taxation and informal workers: Evidence from Ghana's E‐levy
- Anyidoho, Nana A, Gallien, Max, Rogan, Michael, Van den Boogaard, Vanessa
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2023
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/477985 , vital:78144 , https://doi.org/10.1111/dpr.12704
- Description: In recent years, governments in low-income countries have increasingly introduced taxes on mobile money transfers. These are often explicitly promoted as a way of taxing informal economic activity, but critics have noted their potential negative impact on lower-income groups and specifically those in the informal sector. Yet there is virtually no evidence base on the effects of mobile money taxes on informal workers. This article assesses how informal workers in Accra, Ghana, use mobile money and how they perceive Ghana's Electronic Transfer Levy (E-levy), introduced in May 2022. This provides a particularly interesting case study to explore the equity implications of the tax, as the policy was explicitly justified as a way of taxing the informal economy but also includes measures to limit the tax burden on lower-income groups.
- Full Text:
- Date Issued: 2023
- Authors: Anyidoho, Nana A , Gallien, Max , Rogan, Michael , Van den Boogaard, Vanessa
- Date: 2023
- Subjects: To be catalogued
- Language: English
- Type: text , article
- Identifier: http://hdl.handle.net/10962/477985 , vital:78144 , https://doi.org/10.1111/dpr.12704
- Description: In recent years, governments in low-income countries have increasingly introduced taxes on mobile money transfers. These are often explicitly promoted as a way of taxing informal economic activity, but critics have noted their potential negative impact on lower-income groups and specifically those in the informal sector. Yet there is virtually no evidence base on the effects of mobile money taxes on informal workers. This article assesses how informal workers in Accra, Ghana, use mobile money and how they perceive Ghana's Electronic Transfer Levy (E-levy), introduced in May 2022. This provides a particularly interesting case study to explore the equity implications of the tax, as the policy was explicitly justified as a way of taxing the informal economy but also includes measures to limit the tax burden on lower-income groups.
- Full Text:
- Date Issued: 2023
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