Taxation and the Informal Economy in the Global South: Strengthening the Social Contract Without Reciprocity?
This chapter aims to examine the social contract through the lens of informal sector taxation. In so doing, it sets out to identify some of the systemic failures, theoretical blind spots and unequal power relationships which limit the possibilities of strengthening the social contract through taxation. The remainder of the chapter is structured as follows. The first section offers a broad overview of some of the current models of informal sector taxation and outlines several key concepts. The next section makes an explicit link between taxing the informal sector and the social contract by reviewing a number of recent theoretical and empirical claims. Several critiques of these claims, embodied within the ‘new fiscal sociology’, are then considered. In support of these critical perspectives, a number of well-documented challenges to strengthening governance and accountability through taxation are then discussed in this section. Finally, the chapter concludes by reflecting on a case study of informal street vendors and market workers in Accra, Ghana. The ensuing discussion considers how some of the perspectives of the new fiscal sociology, which theorise the strengthening of the social contract through taxation, sit in tension with the realities experienced by informal workers in the global South.
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