Over the last two years, I have been travelling to Ethiopia, Rwanda and Sierra Leone to collect qualitative evidence for a forthcoming paper co-authored with Dr Giulia Mascagni. This paper studies the gendered drivers of tax compliance. In this blog, I reflect on my experience and share some insights on gender and tax.
“This is a man’s world, and we need male allies if we want any chance of success for women”, said an Ethiopian civil society activist as she treated me to a fresh pot of coffee in her Addis Ababa office.
Her comment came within the context of the advocacy activities the Center for Accelerated Women’s Economic Empowerment (CAWEE) was pursuing. The organisation campaigned on behalf of female businessowners in Ethiopia to establish a fair environment for women to conduct their operations. More specifically, they wanted to be relieved of the burdensome taxes imposed on profits that did not exist.
Although good economic arguments have vouched for increasing the number of female taxpayers, gender equality should not be undermined to this end. In fact, unlike male-owned firms, most profits from female-owned businesses do not make their way back into building a capital base for these businesses. Indeed, the biggest share of these profits is re-directed towards household usage or to repay debts obtained from the informal credit market. In this context, taxing both types of firms in the same way makes little sense if equity in the tax system is desirable. Such a message has been reiterated through several conversations I have had with women over the last two years.
Rethinking data collection from a gendered perspective
As the adoption of evidence-based policy strategies is increasing, we should re-consider through a gendered lens what this evidence entails and how data is collected. Our cross-country research initially used taxpayer perception surveys, developed for other ICTD projects in Rwanda, Eswatini, Ethiopia, Nigeria, and Sierra Leone. Our primary data analysis demonstrated that overall, both women and men are driven by similar concerns to comply with their tax obligations, and that their experiences do not vastly differ from one another.
Instinctively, these results did not convince us, hence we decided to look beyond what is traditionally perceived as sufficient data. To this end, we engaged in semi-structured conversations with female business and property owners, recording in detail their experiences of interacting with different aspects of the tax system. We quickly realised that whilst taxpayer perception surveys have come a long way in providing important insights on the drivers of quasi-voluntary compliance, they do very little to account for women’s lived experiences as entrepreneurs or property owners.
Our survey data analysis revealed some statistically significant gender differences, but these were not as stark as those we found when conducting the semi-structured interviews and focus group discussions. This motivated our interest in re-thinking data collection strategies when studying gender and tax, and contributed to a growing body of work in this field.
Indeed, what is often referred to as ‘gender disaggregated data’, is in fact sex disaggregated data. The former is desirable for making tax systems work for women, and for that purpose, variables that are not necessarily tax related need to be included in survey questionnaires. For example, household expenses are often linked to women’s inability to pay taxes. In Ethiopia, female taxpayers reported having to shut down business operations as managing their households’ responsibilities imposed severe time constraints and impeded their ability to properly run the business. While this negatively affected profitability, it did not translate into concessions on tax liabilities, threatening the sustainability of business operations.
Moreover, according to our findings, penalties imposed on defaulters affect women more than men as the former are more deeply affected by feelings of guilt and shame. This is even the case when non-compliance is due to funds being spent on legitimate household expenses like medical bills, school fees, transportation costs, or just working in low-profit sectors in the economy.
Building a gender equitable tax system
Our deep dive shows that tax systems are not designed to be just to female taxpayers. The data that informs tax reforms does not collect information points that affect women in specific ways. On the surface, these factors should not matter to a revenue authority, whose primary goal is the collection of taxes in a fair and transparent manner. However, in understanding how factors outside the tax system affect the ability to engage with it and make tax payments, revenue authorities can work with specialised knowledge and make tax policy more equitable, promoting gender equity more broadly, by example.
Historically, taxes have been at the centre of many social struggles and movements like the fight against the Salt tax in the Indian independence movement, which contributed centrally to reshaping the society that it burdened. Our research ambitiously proposes using taxes as a tool to improve normative notions of social justice for women. An important piece of the puzzle to achieving gender justice lies in effective tax reform.
As ICTD colleagues have said, gender equality needs fixes that go beyond the tax system. Our work shows one way in which using granular data, both quantitative and qualitative, can achieve this goal.
