While debates about taxation and social protection in relation to the informal economy are widespread, there is little empirical evidence to support them. Using new and representative data on workers in informal employment in Accra, Ghana, this paper contributes novel evidence on the extent to which these workers have access to social protection and benefitted from COVID-19 relief programmes.
Three key findings emerge. First, most informal-sector operators in Accra are not covered by social protection, with the exception of the National Health Insurance Scheme. Second, in contrast to a number of claims, these workers do pay a range of taxes, permits, levies and fees. Especially for informal-sector operators at the lower end of the income spectrum, the ratio of taxes to earnings is substantially higher than for formal workers. Third, informal-sector tax burdens are highly regressive, with a disproportionate burden falling on the lowest earning segments of the sector. The evidence therefore suggests that for substantial proportions of the informal sector there is little room for further taxation or contributions.
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