Informal sector taxes and equity Evidence from presumptive taxation in Zimbabwe
Date
2019-01
Authors
Dube, G
Casale, D
Journal Title
Journal ISSN
Volume Title
Publisher
Blackwell Publishing Ltd
Abstract
Using a mixed-methods approach, this article evaluates the equity implications of Zimbabwe's presumptive tax system, introduced in 2005 to raise revenue from the country's growing informal sector. The representative taxpayer method, which compares the hypothetical tax burdens of formal and informal sector taxpayers at varying income levels, shows that the presumptive tax regime undermines both vertical and horizontal equity. In addition, interviews with key informants from the tax authorities, other relevant organizations and informal sector operators were conducted to probe issues around collection, compliance and perceptions of fairness. The qualitative data suggest that weak enforcement, with more visible informal activities bearing the brunt of the tax burden, and selective (and sometimes politically motivated) application of the legislation, compromise equity further.
Description
Keywords
equity, informal sector, presumptive taxes, Zimbabwe
Citation
The design and implementation of minibus taxi presumptive taxes