What does tax policy have to do with gender equality?
Africa’s macroeconomic landscape is a significant shaper of gender equality and women's empowerment on the continent. The pandemic and other crises have hit African economies hard, with many African governments focusing on debt repayment and fiscal consolidation, limiting investment in social services.
Recent research by Christian Aid shows that more and more countries are once again facing debt crises; 34 African countries now spend more on their external debt payments than on healthcare or education. In response to these debt pressures, and under the influence of powerful international financial institutions like the IMF, many countries are now implementing austerity measures, such as restricting public wage bills that nurses and teachers rely on and cutting back on social protection measures, whilst also increasing consumption taxes that especially hit those who can afford it the least.
Over the last 30 years, governments have increasingly relied on raising consumption taxes like VAT (value added tax) or GST (goods and services tax) as a revenue stream that is relatively straightforward to raise. However, often with these types of taxes, the poor pay proportionately more than the rich, and they often fail to account for the unique challenges faced by women in the economy – in other words, they’re often gender blind.
Feminist advocacy for gender-just macroeconomic policies in Africa
Over the last 2 years, Christian Aid has been working to foster gender-just macroeconomic policymaking across Africa. We’ve worked with local partners and feminist advocates to demystify neoliberal economic models that prioritise fiscal austerity over social equity.
To understand the gendered dimensions of macroeconomic policies in Sierra Leone, Burkina Faso and Zimbabwe, we worked with partners to engage with grassroots women who are affected by these policies, as well as supporting research by national civil society organisations.
This article, the first in a series, focuses on research from Sierra Leone conducted by the Budget Advocacy Network. We explore how the country’s Goods and Services Tax (GST) policy impacts women traders and producers, exacerbating existing inequalities.
Gendered impact of Sierra Leone’s GST policy
Sierra Leone introduced the Goods and Services Tax (GST) in 2010 to boost government revenue. In 2022, the government lowered the GST registration threshold from SLL 350 million to SLL 100 million (around £3,500 GBP). This meant businesses earning SLL 100 million or more annually were now required to register and charge GST on their products.
For every one Sierra Leonean Leone the government raises, it spends 1.69 Leone on paying off debt. The government spends more than seven times the amount in debt payments than on education (7.32%). And more than 14.49% than on health services.
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Fiscal consolidation measures, like increasing taxes, are often not the best way to ensure debt levels become sustainable. Evidence shows focusing on investment leads to higher growth and lower debt in the long term. But even governments that may want to pursue this approach can be restrained by what lenders, investors and others consider ‘good’ orthodox economics.
Women account for 52% of the country’s population and they’re the majority of the 80% small-scale producers and traders in Sierra Leone. The reduced GST threshold brought many women-owned small businesses into the tax net for the first time, exacerbating challenges they already faced as well as introducing new challenges.
Women’s lived experiences
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Compliance costs and inflation: Many women lack understanding of GST regulations, making compliance costly and time-consuming. Inflation has further forced them to raise prices, leading to reduced sales, diminished profits, and, in some cases, business closures.
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Impact on households: Women’s dual roles as traders and consumers mean rising prices have directly affected their families. As one woman in Freetown shared, 'I used to cook four cups of rice for my family, but now I’ve reduced it to two because of the consistent rise in prices.'
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Economic informality: Some women have been forced to move their businesses back into informality to avoid the GST burden, worsening their economic vulnerability.
Systemic challenges
Interviews with cross-border traders revealed broader systemic issues. Click through for more information.
Many women use a ‘groupage system’ to import and transport goods —pooling goods with others to save costs. This approach, while practical, prevents them from claiming GST tax credits on goods purchased from registered suppliers:
'Most of the small and micro enterprises do buy their goods from large traders or neighbouring Guinea. Customs and excise duties have already been paid on these goods, and asking us to include GST on our products will increase the price and the potential of losing customers who will prefer to buy from large businesses selling the same product.'
- Key informant, Makeni
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Some of the key informants mentioned that there are other areas where the government is not maximising revenue collection and should focus instead on implementing policies that will not hurt their small and micro-businesses. For example, GST exemptions are given to investors, especially in the mining sector. Kenema explained:
'When a country gives generous fiscal concessions to mining companies and wants to compensate for that by reducing the registration threshold for businesses, the impact is that several small businesses will close down or go underground and start evading taxes. It is usually advisable for tax administrators to establish a high threshold that will allow a focus on larger taxpayers, like mining companies.'
- Key informant, Kenema
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The research found that a prevailing theme among all key informants was a systematic lack of consultation between the government and women traders and producers, speaking to major power imbalances with major corporations:
'Even when these women or groups are involved in tax policy discussions, their suggestions are most often not reflected in the enacted tax laws. Those suggestions accepted in tax policies are largely those from businesses in the formal sector. The lack of participation of women in tax policy formulation leads to the absence of gendered policies in tax laws in Sierra Leone.'
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Towards a gender-responsive tax system
In 2024, the government of Sierra Leone reversed its 2022 GST reform and raised the GST threshold to SLL 500 million (approximately £17,000 GBP). This decision, driven by pressure from civil society and traders, paired with a number of progressive tax measures, such as capital gains tax at 25 percent and a new gambling and casino tax at 10 percent, will likely make life a little easier on the majority of women traders and producers in Sierra Leone.
On the other hand, the government also announced that it will re-introduce an import duty on rice at five percent, which might have significant implications for the price of rice in Sierra Leone and is likely to carry substantial gendered impacts.
A way forward
Overall, we see that critical macro-economic decisions like these, that shape the lived realities of marginalised communities everywhere, are still too often being made by policymakers who don’t have a full picture of who will be the winners (and losers). Robust analysis of how women and men, and groups that are particularly vulnerable in society, are impacted differently by macroeconomic policies is desperately required across the board. Ultimately, to create economies that serve and are shaped by women and men equally:
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Tax systems need to shift from an over-reliance on regressive to progressive taxes.
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Gender analysis needs to be integrated at all stages of fiscal policymaking including tax policies.
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Global coordination on tax to tackle cross-border tax abuse by multinational companies and wealthy individuals is critical. To ensure developing countries and communities have a voice in shaping global tax rules, the process for establishing a UN Framework Convention on International Tax Cooperation is crucial and all countries should support this process and negotiate it in good faith.
