I've spent the last week in northern Sudan, talking to informal manufacturers and craftsman about the problems they face in dealing with local taxes and license fees. Many say they would be happy to pay up if only they received services in return. Mohammed, who runs a metal-working shop in Khartoum, is frustrated by the unwillingness of local government to take his concerns seriously:
Why should I pay these taxes when I get nothing in return? They ask us to pay an anti-malaria fee, but we don't see any clinics; they ask us to pay a sanitation fee but we don't have clean water; and look at the rubbish in the streets. We tried to negotiate with the local authorities but it's hard. The tax collectors have targets and if they don't meet them, they lose their jobs. Once we persuaded the court that the fees were illegal but the authorities still came and locked up my workshop until I paid. We also tried to get mediation, but the employers' federation, which only represents large firms, wouldn't listen to us.
Part of the trouble is that local authorities depend on transfers from central government. When the books don't balance they make up for it by squeezing local businessmen. Of the ten fees Mohammed pays, only one is directly related to his trading license. There's no simple answer. But helping local governments understand the effect their actions have on private investment would be a start.
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