The Price of Simplicity: Skewed and Regressive Taxation in Accra’s Informal Sector
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Research in Brief 140
International and domestic policymakers often hope that informal economies represent an ‘untapped goldmine’ for government coffers. However, growing evidence suggests that these claims are often severely overstated, ignoring the payments that informal sector operators already make, overestimating their ability to contribute more, and failing to account for the often-high costs of collection.
This paper examines taxation patterns in the informal sector in Accra, Ghana. Using a novel dataset of 2,700 informal enterprises in the Accra metropolitan area, we present the first account of the tax burdens of informal enterprises that is representative of Accra’s informal sector, allowing us to verify common assumptions about the distributive impacts of taxation.
Nana is an Associate Professor at the Institute of Statistical, Social and Economic Research (ISSER) and the Director of the Centre for Social Policy Studies (CSPS), both at the University of Ghana. Her research areas focus on social policy and social development.
Max Gallien is a Research Fellow at the ICTD. His research specialises in the politics of informal and illegal economies, the political economy of the Middle East and North Africa and development politics. He completed his PhD at the London School of Economics. Max co-leads the informality and taxation programme with Vanessa, as well as the ICTD’s capacity building programme.
Michael Rogan is an Associate Professor in the Department of Economics and Economic History and the Neil Aggett Labour Studies Unit (NALSU) at Rhodes University. Since 2011 he has been a research associate in the global research and advocacy network, Women in Informal Employment: Globalizing and Organizing (WIEGO). He holds a PhD and a Master’s degree in Development Studies and a Bachelor of Arts in International Studies from the University of Washington in Seattle. His research interests include: gender, informal employment, health, poverty and inequality, and education and skills development.
Vanessa van den Boogaard is a Research Fellow at the ICTD and a Senior Research Associate at the Munk School of Global Affairs and Public Policy at the University of Toronto. She completed her PhD thesis on informal revenue generation and statebuilding in Sierra Leone, and has ongoing research on the topic in the Democratic Republic of the Congo and Somalia. Vanessa leads the ICTD’s new programme on civil society engagement in tax reform and co-leads the research programme on informal taxation.
Citation: Anyidoho, N.A.; Gallien, M.; Rogan, M. and van den Boogaard, V. (2024) The Price of Simplicity: Skewed and Regressive Taxation in Accra’s Informal Sector, ICTD Research in Brief 140, Brighton: Institute of Development Studies, DOI: 10.19088/ICTD.2024.098
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