Taxation in Zimbabwe’s urban informal sector: Evidence from two cities

Over 80% of Zimbabwe’s population relies on the informal economy for sustenance. Through an informal taxpayer survey and qualitative inquiries in two cities, the Capital, Harare, and Masvingo, a smaller city, the study (currently ongoing) seeks to investigate informal Micro and Small Enterprises (MSEs) earnings, general operating conditions, access to services and the intricate web of formal and informal taxes they pay to both local government and central government taxing authorities. Current taxation policies are heavily targeting this sector but without adequate nuance on the evidence on the general conditions of work most micro enterprises face. The study captures taxpayer perceptions, attitudes, and relationships with tax authorities. The study also draws from qualitative interviews with MSEs and taxing authorities that will delve into perspectives, unravelling tax morale and governmental satisfaction or discontent that are part and parcel of fiscal contract dynamics. Moreover, these discussions will tap into the insights of local and central government authorities, unveiling the enforcement challenges and conditions faced within the sector in each city. By drawing comparisons between the two cities, the study’s outcomes hold broad-reaching implications on state consolidation and fiscal contracts under highly informal settings but do so by going beyond the capital city biases in such studies. The study provides insights to shape more effective tax policies that fully take the informal sector’s general conditions, earnings and safety nets into account to engender equitable ways that integrate the informal sector into the formal systems in the long term.