Sierra Leone is currently launching a package of tax administration reforms, with a series of new projects to be piloted over the time period 2020 to 2022. One of these projects is the piloting of the block management system (BMS) in Freetown, which aims to increase the number of services directed to micro and small taxpayers and to reduce the number of businesses who have yet failed to register with the National Revenue Authority (NRA).
The project seeks to understand the practical challenges of identification and registration of informal businesses, as well as the procedures, negotiations, informal rules and practical norms that emerge as street-level tax collectors are engaging with informal enterprises. While the project’s focus is consequently on the initial stage of the BMS pilot, we also seek to follow up with collectors once the temporary offices have been established. The project is guided by the following research questions:
- What are the primary challenges for local tax collectors in identifying and registering taxpayers that are operating within the informal sector? Do these challenges differ across the Western, Eastern and peri-urban areas? As registration drives are dynamic processes, we intend to highlight the challenges and practical solutions undertaken to address the challenges throughout the pilot phase, and to document the evolving nature of approaches to the programme.
- How do different informal networks differ in the challenges they provide for local tax collectors?
- What role will institutional coordination amongst different government agencies in charge of registering new businesses play in streamlining the exercise? How will official guidelines for tax officers, if any, be developed? What level of training will tax officers be offered?
- How are local tax collectors able to manage their relationships with economic actors operating in the informal sector? What forms of negotiations emerge and how are they structured? What types of practical norms emerge on how tax officials engage with informal businesses? What are the incentives for street-level staff to register or not register? To what extent are field staff actually focusing on taxpayers who are more likely to be productive taxpayers? This will be especially relevant for the blocks selected to host the temporary offices.
- How are these dynamics affecting different informal networks based on their trade, location, institutional history and social and political capital?