Samuel Jibao, Centre for Economic Research and Capacity Building Vanessa van den Boogaard, PhD student, University of Toronto Wilson Prichard, ICTD and University of Toronto

1. Informal Taxation:
What Have We Learned?
Samuel Jibao, Centre for Economic Research and Capacity Building
Vanessa van den Boogaard, PhD student, University of Toronto
Wilson Prichard, ICTD and University of Toronto

2. Informal taxation
“Tax-like payments, made to both state and
non-state actors, that are not mandated by
law.”

3. Significance
• Livelihoods and welfare of taxpayers
• Fiscal decentralizaJon and effecJveness of tax
reforms
• State building and accountability

4. Focus of ICTD research
• Empirical understanding of informal taxaJon
• Policy implicaJons of informal taxaJon

5. Findings from Sierra Leone

6. Classifying informal taxes
§ 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
tradiJonal authoriJes, not mandated by law
§ Informal Non-State Taxes: Payments to non-state
groups including armed groups and community
development associaJons, for services and/or
protecJon

7. (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

8. … and regressive
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Total Tax Formal Informal State TrandiJonal
AuthoriJes
Non-State
Tax payments as a proporBon of income
Lowest
QuinJle
Top
QuinJle

9. (2) 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
Jme
Some of the
Jme
None of the
Jme

10. Findings from elsewhere

11. Implications
• Informal taxaJon should be considered in
assessments of livelihoods/poverty
• The “informal” is criJcal to thinking about reform
of the formal
• Informal tax may meet ciJzen needs, implying
desirability to explore “second best” or “hybrid”
structures

12. Remaining questions
• PracJcal viability of “hybrid” models
• Meaning of relaJvely greater trust in informal
taxaJon
• RelaJonship between informal taxaJon and
state-society relaJons, compliance with formal
tax systems

13. Thank you!
አመሰግናለሁ
sjibao@yahoo.ca
v.vandenboogaard@utoronto.ca
wilson.prichard@utoronto.ca