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Taxation and Post-‐‑conflict Statebuilding: Exploring Informal Taxation and its
Implications in Sierra Leone
Samuel Jibao, Centre for Economic Research and Capacity Building Wilson Prichard, Interna9onal Center for Tax and Development
Vanessa van den Boogaard, University of Toronto
Taxation and post-‐‑conflict statebuilding
…but caution is needed
Understanding informal taxation in post-‐‑conflict se@ings
An initial mapping from Sierra Leone
Classifying informal taxes “All payments—whether cash or in kind, including labour 9me—that are made as a result of the exercise of poli9cal power,
social sanc9on or armed force (as opposed to market exchange)”
§ Formal State “Taxes”: Statutory taxes under the law § Informal State “Taxes”: Payments to state officials not mandated by law
§ Informal Taxes to TradiBonal AuthoriBes: Payments to tradi9onal authori9es, not mandated by law
§ Informal Non-‐State Taxes: Payments to groups including armed groups, community development associa9ons, religious organiza9ons, informal security groups
(1) Informal taxes are extensive
Proportion of tax payments per household per annum, by tax type
Formal taxes to state actors
Informal taxes to state actors
Informal taxes to chiefs
Informal taxes to non-state actors
(2) The burden can be heavy…
0%
25%
50%
75%
100%
Mean proporBon of taxpayers that:
Took out a loan in the last year in order to pay a tax
Decided not to engage in a par9cular economic ac9vity in the least year becauses the taxes were too burdensome
… and regressive
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Total Tax Formal Informal State Trandi9onal Authori9es
Non-‐State
Tax payments as a proporBon of income
Lowest Quin9le
Top Quin9le
(3) Higher trust in informal than formal
0%
20%
40%
60%
80%
100%
Central government taxes (N=140)
Local government
taxes (N=1436)
Local government user fees (N=556)
Informal state taxes (N=257)
Chiefdom taxes (N=558)
Non-‐state taxes (N=1618)
Mean proporBon of taxpayers believing that the taxing actor uses tax revenues to benefit the community most, some or none of the Bme
Most of the 9me
Some of the 9me
None of the 9me
Implications
1. Informal taxa9on should be considered in assessments of livelihoods/poverty
2. The informal is cri9cal to thinking about reform of the
formal – and why the formal generally underperforms 3. Informal tax may meet ci9zen needs, implying desirability of
exploring “second best” or “hybrid” structures 4. Paaerns of taxa9on may offer powerful insights into the
character of local governance and power
