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Submitted by Megha on

Hi Joseph - thank you for your comment and question. I don't see firms (whether formal or informal) simply as tax-revenue-generators. If we care about poor households graduating into middle-income status, firms should be given an opportunity to grow so that their employees have stable jobs, and thus, incomes. Becoming formal is an opportunity for firms to graduate from micro to small to medium and finally to large status - owing to greater access to credit, production linkages with larger firms, exporting and so on. Tax revenues ought to follow.