Women in low-income African countries could be better served by tax policy tailored toward low-income and informal-sector workers, said tax and development experts.
In an August 27 high-level policy dialogue webinar hosted by the African Tax Administration Forum, panelists noted how the COVID-19 crisis has exacerbated gender-based inequalities in African countries through lockdowns and loss of economic activity.
Women are much more likely to be employed in the informal sector, and 80 percent of most African countries’ economies are informal, said Attiya Waris, a professor of fiscal law and policy at the University of Nairobi. However, tax and other economic relief is not reaching them, said Vanessa van den Boogaard, a research fellow at the International Centre for Tax and Development.
Van den Boogaard said tax policy during the pandemic, thus far, has focused largely on workers in the formal sector through tax payment deferrals and early refunds, labor and social contribution tax exemptions, and other measures to help businesses and individuals free up their cash flow. These changes make little difference to informal sector workers — largely women — since many do not pay formal taxes at the national level, she said. Instead, small taxpayers are affected by submarket taxes and fees like market rental fees, utility fees, public transportation fees, and indirect taxes like VAT.
Several panelists said a more progressive tax system, in which high-net-worth individuals and large multinational corporations pay tax proportionately to their earnings and wealth, would greatly improve outcomes for women in a post-COVID-19 economy.
Joy Waruguru Ndubai, a research and teaching associate at the Institute for Austrian and International Tax Law, said governments should take regressive tax revenue from informal-sector workers and put it toward gender-responsive public services. She challenged policymakers to think of tax as one piece of a larger puzzle in efficient public spending to benefit the most vulnerable groups.
Better targeted economic relief, like release from presumptive taxes on small and informal businesses, mobile money transfer taxes, and market use fees, will have a greater impact on women working in informal sectors, said van den Boogaard.
Policymakers should also consider graduated rates for personal income tax (PIT) and informal-sector taxation, PIT and social security contribution exemptions for low-income workers, elimination of user fees for public services and utilities, and individualization of PIT to recognize women’s contributions to household income, said Ndubai.
Panelists also emphasized that more women need to be hired in tax administrations, particularly in middle management and senior roles.
Research from the Uganda Revenue Authority (URA) shows that female tax collectors experience better compliance and trust from taxpayers than their male counterparts, said van der Boogaard and Milly Nalukwago Isingoma, assistant commissioner of research at the URA. In OECD countries women make up 60 percent of tax administrations, but in Africa they only make up about 25 to 30 percent of tax administrations, said van den Boogaard.
The URA has made great strides for gender parity in employees, said Nalukwago Isingoma, with women representing 38 percent of top management jobs. South Africa, Kenya, Nigeria, and Cameroon all have increased their employment of women in tax authorities. But there is still work to do, she said, noting that women face pressures to drop out of the workforce due to childbirth, home and family expectations, and a reluctance to apply for leadership roles.