Taxing the Rural Informal Sector: Myth or Reality?

Abstract

The size of the informal sector in the Zimbabwe in 2012 was estimated at approximately US$7.4 billion (Fin Mart 2012). Various reasons were posted as to the causes of the informal sector world over and more recommendations were made to address the informal sector. This paper sought to establish whether it is economically sound to tax the rural informal sector in Zimbabwe. The method adopted was purely desk and library research. It was found that until the government recognise the informal sector in terms of economic development and invest in it (informal Sector), it should not in any case impose taxes on the poor rural informal sector. The paper recommends that the Government of Zimbabwe must integrate pro-poor policies into the tax system and revamp the once vibrant formal sector.

Keywords: Informal Sector; Rural Informal sector, Taxation, Zimbabwe