“Informal” taxation in Sierra Leone

Samuel Jibao, Wilson Prichard, &

Vanessa van den Boogaard

8 December 2014 ICTD Annual Meeting

Arusha

(1) Background: “Informal” or “real” taxation

(2) Research methods

•  Survey of 1129 taxpayers

•  In-depth interviews •  Focus group discussions

(3) What does the average taxpayer pay in a year?

4.27 taxes

USD 132.64

All taxes

Formal taxes to state actors

Informal taxes to state actors

Informal taxes to chiefs

Informal taxes to non-state actors

“Formal” state taxes

Income tax

Sales tax

Business taxes

Market fees

Local (poll) tax

Property tax

User fees

Other state taxes

“Informal” taxes to state actors

Payments at police/army checkpoints

Bribes to central/local government actors for services

“Informal” taxes to chiefs

Taxes to chief

Labour payments to chief

Taxes to other non-state actors

Payments to secret societies

Payments to trade/market associations

Payments to religious organizations

Informal user fees to doctors/teachers

Payments to INGOs/CBOs

Community development taxes

Payments to non-state security actors

Impact on taxpayers

0%

25%

50%

75%

100%

Mean proportion of taxpayers that:

Took out a loan in the last year in order to pay a tax

Decided not to engage in a particular economic activity in the least year becauses the taxes were too burdensome

(4) Taxpayer perceptions

Fairness

0%

25%

50%

75%

100%

Central govt taxes (N=154)

Local govt taxes

(N=1492)

Local govt user fees (N=621)

Informal state taxes

(N=266)

Chiefdom taxes

(N=576)

Non-state taxes

(N=980)

By tax type, mean proportion of respondents believing that:

The tax rate is fair

The tax is fairly applied and collected

Fairness

0%

25%

50%

75%

100%

Prop

ortio

n of

taxp

ayer

s

Perceived likely outcomes for non-payment, by tax type

Verbal harassment

Physical harassment

Imprisonment/detainment

Transparency

0%

25%

50%

75%

100%

Central govt taxes

(N=154)

Local govt taxes

(N=1492)

Local govt user fees (N=621)

Informal state taxes

(N=266)

Chiefdom taxes

(N=183)

Non-state taxes

(N=1673)

By tax type, mean proportion of respondents reporting that:

They understand how the tax rate is set

It is easy to find out how revenues from this tax are used

Accountability

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 proportion of taxpayers believing that the taxing actor uses tax revenues to benefit the community most, some or

none of the time

Most of the time

Some of the time

None of the time

Accountability

0%

25%

50%

75%

100%

Central government

Disrict government

Chiefdom

Mean proportion of taxpayers believing that the respective level of government would be likely to:

Misuse tax revenues

Steal money intended for a development project

Fiscal exchange

0%

25%

50%

75%

100%

Central govt taxes

(N=147)

Local govt taxes

(N=1461)

Local govt user fees (N=52)

Informal state taxes

(N=256)

Chiefdom taxes

(N=571)

Non-state taxes

(N=1643)

What is the primary good/service you get in return for making this payment?

A specific service/good in the community

Security

Financing salaries & general activites of organization, but not specific services

Avoidance of harassment/stress/hassle

No service

(6) Areas for further research

•  Formal and informal taxation & the power of chiefs

•  Informal taxation & legacies of conflict

Thank you! Merci beaucoup!

Asante sana!