Informal sector taxes and equity: Evidence from presumptive taxation in Zimbabwe

Dube, Godwin; Casale, Daniela

doi:10.1111/dpr.12316

Cited by 43 publications

(51 citation statements)

References 27 publications

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“…Third, a presumptive tax raises the issues we discussed in the first section above: while nominally drawing businesses into the tax system, a presumptive tax does not mean that the redistributive side of the tax system will be available to those paying the presumptive tax. Finally, its implementation risks being inequitable; research has shown that the more visible informal businesses (often in public space) are more likely to be targeted for a presumptive tax (Dube and Casale 2019).…”

Section: Presumptive Direct Taxationmentioning

confidence: 99%

The Informal Economy Revisited

Chen¹,

Carré²

2020

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This landmark volume brings together leading scholars in the field to investigate recent conceptual shifts, research findings and policy debates on the informal economy as well as future challenges and directions for research and policy. Well over half of the global workforce and the vast majority of the workforce in developing countries work in the informal economy, and in countries around the world new forms of informal employment are emerging. Yet the informal workforce is not well understood, remains undervalued and is widely stigmatised.Contributors to the volume bridge a range of disciplinary perspectives including anthropology, development economics, law, political science, social policy, sociology, statistics, urban planning and design. The Informal Economy Revisited also focuses on specific groups of informal workers, including home-based workers, street vendors and waste pickers, to provide a grounded insight into disciplinary debates. Ultimately, the book calls for a paradigm shift in how the informal economy is perceived to reflect the realities of informal work in the Global South, as well as the informal practices of the state and capital, not just labour.The Informal Economy Revisited is the culmination of 20 years of pioneering work by WIEGO (Women in Informal Employment: Globalizing and Organizing), a global network of researchers, development practitioners and organisations of informal workers in 90 countries. Researchers, practitioners, policy-makers and advocates will all find this book an invaluable guide to the significance and complexities of the informal economy, and its role in today's globalised economy.

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Section: Presumptive Direct Taxationmentioning

confidence: 99%

The Informal Economy Revisited

Chen¹,

Carré²

2020

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“…Tanzanian MBs have been left behind in the tax system for a long time now despite their fast growth since the 2010s (Diao et al, 2018). The exclusion of MBs in the tax system is attributed to the following factors, generation of significant cost to the firm or business, and lack of record keeping (Dube & Casale, 2019). Almost 72.1percent of Tanzanian MBs do not keep proper records for tax assessment .…”

Section: Literature Review 21 Informal Operations Within Micro Businesses (Mbs)mentioning

confidence: 99%

Enhancing Tax Administration to Micro Businesses Through Digital Technology: An Exploratory Study in Dar Es Salaam, Tanzania

Gomera

Oreku

Shau

2021

ESJ

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Many studies have shown the importance of Micro Businesses in widening the tax base. However, a practical approach regarding tax administration of micro businesses has so far never been explored. Additionally, information on the manner in which digital technology addresses challenges of tax administration in the Tanzanian context is limited. Therefore, this study explores the potentials of digital technology in enhancing tax administration of micro businesses. Specifically, the study looks at the current tax administration of micro businesses, the challenges thereon, and the existing potentials of technological solutions in enhancing tax administration of micro businesses. The study used mixed method research approach whereby qualitative and quantitative data were collected through interviews and questionnaires respectively. Interviews were conducted to 24 informants from Tanzania Revenue Authority and questionnaires were administered to 137 micro businesses in Dar Es Salaam, Tanzania. Thematic approach was used to analyse qualitative data and descriptive analysis was used for quantitative data. The study finding reveal that the current tax practices to micro businesses do not comply with tax theories of low administration cost, wide tax base, and simple to administer tax procedures. Additionally, micro businesses face multiple levies, informal operations, and complexity of tax systems that make compliance to tax administration difficult. Moreover, this study established that mobile technology is potential for addressing the challenges. The study contributed to the practical aspect of tax administration that can guide policy makers, researchers and tax administrators in tax administration of micro businesses.

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“…Dube and Casale () describe and analyze the experience of four African countries (Ghana, Tanzania, Zambia, and Zimbabwe) that have implemented informal sector presumptive taxes in recent decades in an effort to improve tax revenues. During the last decades, Zimbabwe has recorded a strong decrease of the tax ratio, which had traditionally been high (Stotsky and WoldeMariam, ; IMF, ): the value of tax revenue as a share of GDP fell from 28% in 1998 to 25% in 2000 before dropping dramatically to about 4% in 2008 (Dube and Casale, ). In such a context where the rapid growth of the informal sector added to the decrease of tax revenues collected, the Zimbabwean government decided to expand the revenue base, adopting, in 2005, a presumptive regime targeted at the informal sector, consisting predominantly of lump‐sum taxes distinguished by the sector of activity.…”

Section: Presumptive Minimum Taxesmentioning

confidence: 99%

“…Dube and Casale () make a comprehensive analysis of the equity implication of the presumptive tax system introduced in 2005 in Zimbabwe. By implementing the representative taxpayer method, the authors compare the hypothetical tax burdens of formal and informal sector taxpayers, at varying income levels.…”

Section: Presumptive Minimum Taxesmentioning

confidence: 99%

“…In terms of administrative effectiveness, the author finds that presumptive taxes were poorly designed and administrated and, consequently, the adoption of such a policy tool did not favor voluntary tax compliance or formal firm registration. When presumptive taxes are compared with their counterparts (i.e., PIT or CIT paid by formal taxpayers), neither horizontal nor vertical equity are achieved, as in the study by Dube and Casale (). Moreover, Dube () points out that the presumptive system adopted in Zimbabwe violates the tax neutrality principle.…”

Section: Presumptive Minimum Taxesmentioning

confidence: 99%

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Presumptive Taxation Methods: A Review of the Empirical Literature

Bucci

2019

Journal of Economic Surveys

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This paper reviews the empirical literature studying the effect of the introduction of presumptive taxation methods on taxpayers’ behavior. Although the concept of presumptive taxation entails numerous alternative methods to determine tax liabilities, I survey two main areas of the literature: indirect tax assessment methods and presumptive minimum taxes. The review investigates efficiency and equity implications of presumptive taxation methods. Conflicting conclusions emerge about the effectiveness of presumptive policy tools in achieving different goals, such as the increase of voluntary tax compliance, the growth of tax revenues, and the reduction of shadow economy and fiscal evasion.

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Informal sector taxes and equity: Evidence from presumptive taxation in Zimbabwe

Cited by 43 publications

References 27 publications

The Informal Economy Revisited

The Informal Economy Revisited

Enhancing Tax Administration to Micro Businesses Through Digital Technology: An Exploratory Study in Dar Es Salaam, Tanzania

Presumptive Taxation Methods: A Review of the Empirical Literature

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