Its tough collecting tax in Mogadishu

2013-07-29 21:23
A Somali trader sells hens in the open-air Hamarweyne market of Mogadishu, Somalia. (Farah Abdi Warsameh, AP)

A Somali trader sells hens in the open-air Hamarweyne market of Mogadishu, Somalia. (Farah Abdi Warsameh, AP)

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Mogadishu - The Somali traders in Mogadishu's markets have long faced down Islamist rebels and warlords demanding money. Now they say there is a new predator: the government tax man.

Militias extorted cash from civilians during much of the last two decades of chaos. Now Mogadishu has a government in place, but shopkeepers view the taxman as the latest in a long line of troublemakers.

That makes tax collection one of the riskier jobs in Mogadishu: Five tax collectors have been killed so far this year, following the killings of 10 last year, according to the director of Mogadishu's municipal council, Abdullahi Artan.

"In some places, if you go without security escorts you're going to take risks," said Ali Haji, a tax collector. "Some of my colleagues were killed because of their work. Very many people don't like our work."

The idea of paying taxes for social services seems outlandish in a nation where few have seen functioning hospitals or schools. But if the Somali government is ever to wean itself off foreign aid and provide social services to its people, the taxman will have to persuade business leaders to pay their part.

On a recent day in Mogadishu's Hamarweyne market, the taxman was having a tough time. Sweating while carrying a plastic bag for cash deposits, he asked one shopkeeper after another to pay up. Many ignored him. But a soldier escorting the tax man threatened an immediate closure of the business if the tax was not paid.

"I haven't earned any money since I came here in the morning, so I can't pay," one woman murmured as the tax collector walked away. Few willingly paid.

Between 2006 and 2011, Mogadishu was controlled by the Islamic extremist group al-Shabaab, and business owners were forced to play by the rebels' tax rules. Following al-Shabaab's ousting in August 2011, a fragile peace has fallen over the city, allowing new construction and business opportunities. Government tax collectors began work for the first time as tax evasion remains high.

"They consider me to be a bandit. They don't want to get taxed," said Mohamed Nor, another tax collector for Mogadishu's municipal government, as he stacked bundles of money into a black plastic bag. Because it takes 2 million Somali shillings to equal $100, tax collectors have to carry around large bundles of bills. "Some are willing to pay, but you still have lawless lovers rejecting to pay it."

Leaders steal tax

One obstacle tax collectors face is philosophical: If it's an established fact that government leaders in Somalia steal tax money, why should citizens pay?

A report this month by the United Nations Monitoring Group on Somalia and Eritrea said that 80% of withdrawals from Somalia's Central Bank are made for private purposes, indicating it is operating as a patronage system for members of government. It said that of $16.9m transferred to the Central Bank last year, $12m could not be accounted for.

"They just collect money that ends up in their pockets," said Sahra Farah, a fuel trader, while looking at a taxman leaving the market.

The daily tax collections are not assessed based on a percentage of sales, but are merely payments toward an annual $135 business permit. That comes to about 25 cents a day, though traders say that price can rise to 40 cents a day, depending on how corrupt a given tax collector may be.

"The amount you pay depends on the tax collector of the day," Mohamed Abukar said at his shop in Mogadishu. "Some shops pay fixed annual money, but some pay on daily basis. There's no proper regulation."

Artan, the director of the municipal council, said that some business owners buy forged business licenses to avoid paying the yearly $135 fee. "Taxing is really challenging here because some people don't want law and order," Artan said.

The UN report this month looked at many of the ways progress in Somalia is held back by corruption, which the report said is "embedded in all layers of society." Large-scale theft of government funds takes place at the Central Bank and Mogadishu's port. The country's nascent oil sector is at risk of corruption woes.

Corruption is so pervasive that it will be difficult to stop, said Abdi Aynte, the director of a Mogadishu think tank called The Heritage Institute for Policy Studies. He said the government must institute an anti-corruption commission that has powers to investigate and must enact policies that encourage transparency and accountability.

"Corruption has become corrosive and part of the culture in this country," Aynte said. "Citizens are unable to receive government services and even private services without bribing someone."

- AP

Read more on:    somalia  |  east africa
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