Effective local governance is an essential part of rebuilding Somalia’s physical infrastructure and social mechanisms, much of which have been destroyed during decades of conflict and instability. The Joint United Nations Programme on Local Governance (JPLG) has played a key role in improving the way government is run at city and state levels. It helps to build roads, clinics, schools and other facilities, train government staff and improve the political representation of marginalised groups, including women. Journalists from Bilan Media have travelled across Somalia to assess the progress of some of JPLG’s work. Naciima Saed Salah went to the city of Hargeisa in Somaliland to report on a JPLG initiative to improve tax collection from businesses operating in the city.
The collection of taxes has been problematic for decades in Somalia, partly because of the disruption to livelihoods and forced movement of people due to conflict, instability, drought, floods and other challenges. There is also a lack of institutional knowledge, with many central, regional and local administrations battered by the long years of violence and hardship.
The relative stability of Somaliland has provided a better environment for the collection of taxes, which are crucial for building and improving societies by helping fund government, education, health and other vital services.
Somaliland’s local government officials have often lacked knowledge on modes of taxation, relying mainly on traditional collection methods from established businesses, many of which were not registered. The tax collection system was sporadic and not always systematised
The director of the JPLG’s local government decentralisation project in Somaliland, Mahmoud Umar, said paying tax is the duty of every citizen, especially the business community.
“Tax revenue helps pay for the basic services to which everyone has a right,” he said. “The taxes we raise from businesspeople also contribute towards the provision of a better working environment for traders as they help cover the cost of cleaning markets and providing security.”
Intervention from the JPLG has assisted local government officials to improve tax collection methods, register many more businesses and find other sources of revenue, hence increasing local government income.
According to Mr Umar, training provided by the JPLG has helped increase tax revenues for the local government and strengthened its administration and management structures.
However, some small business owners and market traders in Hargeisa say they are facing growing economic hardship due to skyrocketing inflation, drought and increased tax demands from local government.
Rooda Ruun Hirsi sells food and small items in a small shop in a market in the city. She says that in the past few months she has been facing growing pressure from the local authorities.
“I set up this shop as a way of preventing my son from leaving Somaliland. After his wife divorced him, he decided to change his life completely and make his way across the dangerous desert and sea to Europe or the Gulf. I stopped him going abroad by opening this shop. We run it together and he no longer dreams of migrating.”
“My whole family depends on my shop. It is our only source of income,” says Ms Hirsi. “We are really struggling because increased tax collection, daily and annually, has reduced my take-home funds which I use to feed and educate my children, pay for their healthcare and other life-saving needs.”
“Running a shop is the only thing I know how to do. I cannot do any other job and I no longer get anything meaningful from my business.”
Ms Hirsi says she was not consulted or informed about the new tax collection methods. She says she was asked unexpectedly to pay her main annual tax during a different month than previously. “If I had been informed beforehand, I would have looked for the money. Now I have no way of finding it and will not be able to pay all of it on time.”
Fardus Ahmed sells vegetables from a small spot in the sun in a market built with assistance from the JPLG. She says she is unable to pay her daily taxes and that she is sometimes treated badly by the collectors who come from Hargeisa’s local government’s tax department.
“They come to me in the morning before I have sold any vegetables and say ‘pay the tax’. They try to take the money before I have sold a single item. If I say, ‘I don’t have money’, they refuse to believe me. Some of them insult me; others order me to ‘pay the tax’.”
“It is so difficult for me, partly because I never know how much I am going to be able to sell my vegetables for,” says Ms Ahmed. “Sometimes people pay well, other times they give me almost nothing.”
As Ms Ahmed sits under the sun with her produce, she needs umbrellas to shade herself and her wares. “Sometimes I cannot even afford to rent an umbrella,” she says.
Ms Ahmed says she has other costs in addition to the taxes.
“I also have to contribute towards the cost of cleaning the marketplace and for the security guard. On some days I am expected to pay my taxes, for the cleaning and the security guard. It is too much.”
Many of the women who trade in market places built as part of the JPLG project said they thought these new spaces would allow them do their business for free. Some are confused and angry about the tax demands which they say they cannot afford.
The JPLG director, Mr Umar, said it is important that everyone pays their taxes in order to contribute towards the development of Somaliland, the provision of essential services and to ensure markets and other working environments are safe and clean.
He said it would be unfair if some traders were exempted from paying taxes, and that those who were struggling should go to the local government complaints office. He said tax revenue was especially important following the destruction by fire in April this year of Somaliland’s biggest market, Waheen, as it needed to be rebuilt.
“The government of Somaliland is currently facing the burdens of inflation, drought, the destruction of Waheen and an unprecedented influx of refugees from southern and central Somalia, Ethiopia, Yemen and Syria,” said Mr Umar.
“We learned during our JPLG training that taxing small traders must be compatible with their finances and that it is an essential contribution towards society as a whole.”
The mother of seven children, Rahma Yusuf, has a more positive attitude towards paying taxes as she sees they can be for the good of society as a whole, especially in a place like Somaliland which faces so many challenges. She says she has paid regular business taxes for the past 11 years.
“I can afford to pay them and I take what I owe to the tax office in June 26 district,” she says.
“I am charged annual and monthly taxes, as well as a daily fee of 1,000 Somali shillings which the local police or tax collectors take from us every morning. I have a good relationship with them and don’t have problems paying my taxes because the money I make from selling my vegetables covers the cost.”
In general, the women who spoke to Bilan Media said they were struggling to pay the taxes, with some saying they could not afford to pay for them at all. They said the situation could be improved if the tax collectors treated them with more dignity and forewarned them when their taxes were due.