Community-Based and Customary Taxation in South-Central Somalia: Possibilities for Hybrid Governance and DIALOGUE Programming !
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! ! ! Community-based and customary taxation in south-central Somalia: Possibilities for hybrid governance and DIALOGUE programming ! Report!commissioned!by!the!Danish!Refugee!Council,!Somalia! ! Written!by!Kailee!Jordan!! TABLE OF CONTENTS ! ! Executive!Summary……………………………………………………………………………………………………………...…..3! ! I.!Introduction…………………………………………………………………………………………………………………………7! ! II.!Research!context! ! Taxation,!state!building!and!good!governance………………………………………………………………………..……8! Taxation!and!state!building!in!southFcentral!Somalia………………………………………………………...…………9! CDRD!and!DIALOGUE………………………………………………………………………………………………………………10! Methodology………………………………………………………………………………………………………………….…………11! Limitations……………………………………………………………………………………………………………….………………12! Case!study!selection:!Hiran!and!Jubaland……………………………………………………………………………….….13! ! III.!Key!Findings! 1.! Actors,!services,!and!networks:!mapping!existing!mechanisms……………………………………….15! 1.1!Key!actors!……………………………………………………..................................................…………………….15! 1.2!Service!provision!and!local!collective!action………………………………………..……………………19! 1.3!Collaborations!across!actors!and!service!provisions………………………………………….………21! ! 2.! Payments!and!revenue!collection…………………………………………………………………………..….…...22! 2.1!Customary!taxation!and!payments!to!nonFstate!actors………………………………………………27! !!! 2.1.1!Clan!payments…………………………………………………………………………………..………27! !!! 2.1.2!Payments!to!religious!entities…………………………………………………………...……….28! 2.1.3!Social!contributions!and!civil!society!payments!………………………………………...29! 2.1.4!Payments!to!private!service!actors………………………………………..…………………...30! 2.1.5!Interactions!between!groups!and!payments……………………………..………………...31! ! 2.2Formal!taxation!and!payments!to!state!actors……………………………………………………………33! ! ! 2.2.1!Payments!to!state!actors……………………………………………………………………………33! ! 3.! Perceptions,!trust!and!legitimacy:!Governance!and!institutions…………………………………...….37! 3.1!Trust!and!legitimacy:!formal!and!informal!institutions…………………………………..…….……37! !! 3.1.1!Perceptions!of!trust!in!formal!institutions………………………………………………….38! !! 3.1.2!Perceptions!of!trust!in!informal!and!social!institutions…………………………….…39! 3.2!Perceptions:!taxation!and!revenue!mobiliZation…………………………………………………….…42! !! 3.2.1!Perceptions!of!payments:!NonFstate!actors………………………………………………...43! !! 3.2.2!Perceptions!of!payments:!State!actors………………………………………………………..45! !! 3.2.3!Challenges!of!formal!revenue!collection………………………………………………..……48! 3.3.!Perceptions:!Willingness!to!pay!fees!to!state!and!nonFstate!actors……………………………50! 3.3.1!Willingness!to!pay:!state!actors………………………………………………….………………50! 3.3.2!Willingness!to!pay:!nonFstate!actors………………………………………………………..…51! ! 4.! Revenue!mobiliZation!and!DIALOGUE!programming……………………………………………………...53! 4.1!Respondents!perceptions!of!the!DIALOGUE!proposal……………………………………………..…55! 4.2!Monitoring!mechanisms!and!collaboration………………………….……………………………………56! ! IV.!Conclusions!and!Recommendations!………………………………………………………………………………...58! ! V.!Annexes………………………………………………………………………………………………………………………………61! ! ! 1! ! Funded!by!the!Somalia!Stability!Fund! ! Commissioned!by!the!Danish!Refugee!Council! ! Research!support!from!the!International!Centre!for!Tax!and!Development! ! With!a!special!acknowledgment!to!the!Somali!field!teams!who!conducted!the!research,!and!the! respondents!who!were!kind!enough!to!share!their!time!and!thoughts.! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 2! EXECUTIVE SUMMARY: ! ! ! I. INTRODUCTION: This report presents the findings of a feasibility study commissioned by the Danish Refugee Council (DRC), exploring customary taxation, accountability and governance across south-central Somalia. The aim of the analysis is to provide insights into the design of a new program, ‘DIALOGUE in Somalia through resource mobilization.’ The feasibility study has been carried out by researchers from the International Centre for Tax and Development and funded by the Somali Stability Fund. The analysis explores two primary research questions: 1)! What is the social reality of customary taxation across south-central Somalia? 2)! What are the potential linkages between customary taxation and formal governance? What are the possibilities for customary taxation to be linked to hybrid service delivery models, such as the DIALOGUE program? Focus groups and key informant interviews were carried out across seven different case study sites across Hiran and Jubaland regions. A national Somali research team undertook fieldwork between May 2016 and June 2016. The consultants undertook remote management of research from Nairobi in May 2016, and analysis of findings in June 2016. The resulting analysis has highlighted a number of relevant findings on customary taxation, community development, and governance across south-central Somalia: There are a variety of different actors and networks involved in taxation and service delivery across case study communities. These actors vary across informal and formal institutions, with different levels of power and decision-making dependent on the community in question. Formal institutions, such as local administrations, generally assert the majority of their power and decision-making authority through the provision of security. Informal institutions, such as clans, traditional leaders or religious entities, generally have a large degree of effective authority on social and community development matters. Effective authority of formal institutions is generally stronger in institutions closest to the communities. Village councils are largely perceived as relevant and legitimate governance structures due to their close ties to the community. Respondents demonstrate a higher level of mistrust when it comes to the district administration, as they are perceived as being farther removed from communities. Region and federal structures hold very little legitimacy and almost no effective authority at the community level. There is a high degree of informal collaboration between state and non-state actors. Examples of collaboration include on service provision, community development projects, security, and the levying of taxation. Collaboration is highest between local level actors, such as village councils, clan and traditional leaders, religious leaders, and civil society groups. ! 3! There exist a wide variety of payments citizens make to both state and non-state actors. Examples of customary taxation are common and found across research sites, including payments such as clan contributions and insurance, religious contributions, civil society collections, contributions to emergency assistance, and other payments to community development projects. These payments are primarily collected by community leaders, such as clan, traditional, religious or civil society leaders. Payments to state actors are generally levied on larger entities, including payments such as business taxes, transport fees for commercial vehicles, or livestock fees. Payments are levied primarily by district officials, such as tax collectors, or by local security forces. Reliance on community-based actors for state collection of revenue was common. State officials worked alongside community leaders, such as clan elders or civil society groups, for community buy-in of taxation. This form of collaboration was often seen during state collection of revenue, with government officials using community leaders to negotiate tax payments on their behalf. Perceptions of revenue collection varied across locations. There was a high degree of variation of perceptions of revenue collection. Nevertheless, respondents generally described state collection of revenue collection as ineffective, negative, or coercive. In areas where there are stronger state-society relations, perceptions and trust in state actors and revenue collection were viewed positively. Social and non-state actors and payments were generally perceived with a higher degree of legitimacy and trust that state-based actors and payments. Overall, respondents described community-based actors more positively than state-based actors, across measures of trust and accountability. Payments made to social actors, such as clans or religious leaders, were also viewed more positively. Informal and customary revenue collection systems are deeply embedded in the social landscape of each specific community. Payments such as clan contributions, religious payments, or civil society collections were viewed as legitimate, and necessary for the social life and the development of their communities. There are several factors that would increase taxpayer willingness to contribute to revenue mobilization. Respondents indicated that factors such as transparency of funds, increased security, and better community development would incentivize them to contribute their own funds for community development projects. This suggests that there is scope for citizens to contribute their own financial resources to a program such as the DIALOGUE proposal. Across all research locations, there was general receptivity and willingness to participate in the DIALOGUE project. This included receptivity by citizens to contribute funds, as well as receptivity by both government and community actors (such as clans, traditional leaders and civil society) to collaborate on such a project. While general receptivity was high, research sites were highly nuanced, highlighting the importance of being cognizant of local context. Power dynamics, existing collaborations and perceptions of revenue mobilization