Taxing the Informal Economy: Challenges, Possibilities and Remaining Questions

Recent years have witnessed significantly increased attention to the challenge of taxing small businesses in the informal sector. However, much of this recent attention has remained focused on comparatively technical issues of revenue maximisation and policy design. This paper argues that this debate should focus increasingly on the wider development implications of informal sector taxation, as well as the political and institutional barriers to improved performance. When considering the merits of committing scarce resources to taxing small informal sector firms, debate has frequently focused on limited revenue potential, high costs of collection and potentially perverse impacts on small firms. By contrast, recent arguments have increasingly emphasised more indirect benefits of informal taxation in relation to economic growth, tax compliance and governance. These potentially broader benefits are increasingly finding support in recent research, but they are contingent on government support and consequently demand further attention. When we turn our attention away from whether tax authorities should tax small informal businesses towards the challenge of how to do so more effectively, we again argue that a broader frame of analysis is needed. Most existing research has focused on developing less distortionary tax regimes and on tax simplification in order to reduce the costs of compliance. However, while important, there strategies remain too narrow. Encouraging tax compliance demands not only lowering costs but also strengthening the potential benefits of formalisation, from increased security to new economic opportunities. As importantly, successful reform needs political support from political leaders, tax administrators and taxpayers alike. This demands greater attention to strengthening political incentives for reform, through strategic policy, administrative and institutional reform. With this in mind, the paper highlights a number of recent experiences that have sought to address these challenges, but which need further study

Optimum combinations of livestock enterprises and management practices on farms including supplementary dairy and poultry enterprises (An application of linear programming)

The object of this study is to determine (1) how scarce feed and other resources should be allocated between livestock enterprises and (2) which management practices or levels should be selected on farms producing a given feed supply. The situation selected for study is an average of 160-acre farms in northeast Iowa which have supplementary dairy and poultry enterprises (i.e., where these two enterprises are not on a large-scale or commercial basis). The cropping program on these farms results in production of 2,652 bushels of corn, 1,230 bushels of oats, 120 bushels of soybeans and 68 tons of forage from pasture and hay land. In addition, optimum programs have been worked out with only 48 tons of forage to determine the effects of restriction in this resource on enterprise combinations. Soybeans are considered to be sold for cash, while grain can be either fed to livestock or sold. Linear programming techniques are used in determining the most profitable management practices and resource allocations or enterprise combinations. In the major solutions, 43 activities or investment opportunities were included: dairy cows of above-average ability, average ability and below-average ability, each fed five different hay-grain combinations and using competitive labor; spring pigs of above-average, average and below-average efficiency; fall hogs with these same levels of efficiency; poultry with these three levels of efficiency, using competitive labor; beef cows; dairy cows as outlined above but using supplementary labor; and poultry as outlined above but using supplementary labor. Several different capital situations also were included in the optimum solutions

A Pattern for Regional Adjustment

Since a land-retirement type of program on a regional basis is among the possibilities for overcoming surplus farm output, an analysis has helped to determine an approximation of how such a program might work

An analysis of income possibilities from farm adjustments in southern Iowa; Including production of Grade B milk

This study was initiated because of the interest shown by people of Adams County in the opportunities for increasing income on farms in the locality-especially with respect to the role of dairying in the county. It is one of several studies of adjustment opportunities open to farm families being made in southern Iowa. The purpose of the study is to determine the income consequences of certain actions which might be taken by individual farm families on soil types similar to those found in Adams County-not to pass judgment on whether these actions are beneficial or harmful to other persons or the community structure. This study has been made for Adams County where Sharpsburg and Shelby soils make up most of the cropland. Owner-operation of a 240-acre farm with 152 cultivated acres is used as a basis for the analysis. Analysis is made of returns from different plans, when farms are operated under either average or superior management. Special attention is given to the role of and returns from a grade B dairy enterprise under the two levels of management. For comparative purposes, situations were studied which excluded grade B dairy under average management and which excluded both butterfat cows and grade B dairy under superior management

Adjust Farm Production by Regions?

Nationwide, across-the-board production control could solve our immediate farm surplus problem. But it may not achieve or encourage the more stable, permanent and economic types of adjustments necessary for the longer run

Normative supply functions and optimum farm plans for northeastern Iowa

This study is part of a regional study in adjustments and supply responses in dairy production. It has two major objectives. One is the application of linear programming to specify optimal organization of typical farms representative of all farms in northeastern Iowa. The second objective is to compute normative supply functions for milk and hogs. As a further step in the latter objective, the results of this study will be combined into a regional study in which normative supply response for milk is aggregated over parts of five states. In the Iowa portion of the study, reported here, farm plans and normative supply functions were derived by parametric (variable-pricing) linear programming for each of 10 representative farms. The technical coefficients used were designed to reflect a level of management and farm technology considered attainable by farmers in 1965. Prices also were estimated for 1965. However, prices for milk and hogs were varied to derive supply functions from optimal farm plans. These normative supply functions reflect optimal levels of production for the various prices

How Much Can We Produce in the Next Several Years?

In last month\u27s article we found that some major agricultural adjustments in Iowa would be needed to acheive the maximum sustained crop production estimated by the Iowa Productive Capacity Committee

Private Agricultural Land Base by Producing Areas for Year 2000

A prime resource in the production of agriculture commodities is land. Individuals throughout the United States have become increasingly concerned over the loss of agricultural land to nonagricultural purposes such as urban sprawl, roads and airports facilities and mining etc. Reduction in the agricultural land base due to urban expansion and other nonagricultural uses could result in less agricultural production unless the reduced land base is compensated by other resources in production. Over time, two viewpoints on this issue have surfaced, one group feels the reduction of agricultural land will be a definite threat to agriculture in the future Because once a piece of land is converted for urban build-up or any other use; chances of reclaiming that land to agricultural production are slim. Another group feels that the conversion rate of agricultural land to other uses is not significant enough to affect future agricultural production With increasing research on crop genetics and resource substitutions, compensation for the loss of land can occur. Few studies have been carried out at regional or at national levels that determine the extent of loss of land and its effect on agricultural production. The objective of this study is to estimate the loss of agricultural land in years ahead. These estimates will be incorporated in the Center for Agricultural and Rural Development linear programming models or right-hand-sides. They will serve as production restraints on the agricultural system

Agriculture and Changing Natural Gas Prices

For the period of analysis, 1982 through 1987, the impacts on agriculture that result from increasing natural gas prices are examined. Two types of models are used in the analysis -- econometric and linear programming. These models are linked together so that a short-run multi-period analysis can be conducted. The econometric model represents national demand for agricultural commodities and projects next year\u27s price while the linear programming component is an agricultural supply model