Taxation and livelihoods: a review of the evidence from fragile and conflict-affected rural areas

Taxation and livelihoods: a review of the evidence from fragile and conflict-affected rural areas

Through a selective review of key literature, this paper argues that if we are truly interested in the relationships between taxation and livelihoods, then an exclusive focus on formal taxation is inadequate. Subsequently, the paper suggests widening the analytical lens to include what might be referred to as ‘informal tax’ – that is, payments and costs (for example, in relation to labour time) which are incurred outside formal statutory arrangements, the benefits of which may be accrued by a variety of state, non-state and community actors or institutions. In reality, the lines between formal and informal taxation are likely to be blurred. Nevertheless, a broad analytical focus on taxation, which captures both its formal and informal dimensions, may be defined as: all payments – whether cash or in kind, including labour time – that are made as a result of the exercise of political power, social sanction or armed force (as opposed to market exchange). Further research is needed to explore these issues, and this working paper can be considered the first step of an ongoing joint research project by the International Centre for Tax and Development (ICTD) and Secure Livelihoods Research Consortium (SLRC) to address this need. 

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