Fiscal governance has taken center stage in donor-championed efforts and initiatives in Somalia as part of their support interventions to (re)build the capacity of state institutions. The focus of these efforts has been mainly been geared towards the federal and state levels. Notably, these efforts, among others, culminated in the establishment of legal frameworks and systems critical for public financial management. Equally important, they produced studies and relevant knowledge, some of which is publicly accessible.

However, such clearly focused attention and interest has apparently been lacking in the Benadir Regional Administration (BRA), which has the largest population in the country and significant revenue potential. It is not only donor-driven governance, particularly fiscal governance, that is missing, but, also any plausible interest or demand from the local elite and civil society towards establishing fiscal governance in the Benadir local authority.

At the same time, the demand from some constituents in Benadir, though intermittent and sometimes seemingly politically motivated, has been limited to defining and determining BRA’s status in the federal system, with limited or no mention of the imperative to improve BRA governance, including fiscal governance, in its current status.

Against this backdrop, Somali Public Agenda undertook a study on BRA revenue generation with the main objective of investigating the revenues that BRA generates, legal frameworks, revenue collection processes, and services provided in return for the revenues raised from the local population. The study explores the status and conditions underlying BRA revenue generation and contributes to the efforts of establishing effective fiscal governance in the Benadir region.

The study selected five districts in BRA (Hamar Weyne, Hodon, Yaaqshiid, Waaberi, and Howl Wadaag) as samples for demographic and economic considerations. SPA conducted focus group discussions and key informant interviews to collect data from the target participants. This commentary presents preliminary findings of the study, for which the data collection phase has recently been concluded. However, a full analysis of the data will be presented in a detailed report to be released in the next few months.

Limited Public Awareness about BRA Tax Revenue

The study found that a significant majority of the research participants had very little awareness about the tax revenue that BRA raises. Study participants could not specify the types of tax revenue that BRA collects from them or others, nor which authority collects which tax revenue. Rather, they appeared to confuse the Federal Government of Somalia (FGS) taxes with BRA taxes. For instance, when asked which types of taxes they pay to BRA, the recurrent answers were Rental Income Tax and Property Tax, which demonstrates how uninformed participants are about the specific taxes they pay and to which authority they pay them. BRA does not collect the Rental  Income Taxes; rather, the FGS Ministry of Finance is responsible for this, while BRA collects Property Tax. However, does BRA collects a list of other taxes and has a range of non-tax revenues, which will be elaborated in the upcoming study report.

Similarly, the majority of participants lacked information on the exact rates of the taxes they pay, largely due – they said – to not receiving information on this matter from BRA. This, combined with the above finding, testifies to how little effort BRA has made to reach out to the local people to provide them with necessary information on the taxes being collected in terms of types, rates, due dates, and the correct methods to pay.

BRA Tax Communication Patterns

Discussions with the study participants revealed that there is no uniform, systematic, or regular communication channel through which different types of BRA taxes, their rates, and due dates for payments are communicated to local taxpayers. Respondents who either reside in rental properties or own properties reported that they infrequently receive mobile messages informing them when their tax payment is due. Despite this, BRA has registered the information of properties in relatively accessible districts, but some participants argued that the information is not being updated by the local administration as properties transfer from one owner to another. Some participants stated that respective district police and BRA tax collectors come to their houses to give them a (mostly) three-day notice period to come to the district office and pay the due taxes.

On the other hand, businesspeople interviewed for this study said that staff from the BRA office that issues business licenses deliver in-person messages to businesses about the expiry of their licenses and the need to renew them immediately. They reported that this office maintains records of the businesses to which it has issued licenses, making it easier to track which businesses have licenses that have expired or are near expiry.

In contrast, Bajaaj owners are the single group of local taxpayers who have access to a mobile application through which they pay the $15 monthly road use tax and receive notifications. Similarly, local police responsible for overseeing compliance with this tax by Bajaaj drivers utilize this technology and can easily identify if a Bajaaj on the road has paid the tax by checking information such as the plate number.

Aside from this, and in general, participants were concerned that they do not receive official communication about the rates of different taxes, relying instead on what tax collectors tell them to pay.

Anger and Criticism of BRA Tax Collectors’ Behavior

Participants in the study unanimously voiced vehement anger and resentment towards BRA tax collectors’ behavior, which they described as “unprofessional,” “disrespectful,” and “disdainful” to the dignity of the local population. They criticized BRA for assigning tax collection to “untrained and undisciplined” armed police and civilian staff, whom they said are unfit for this job, which requires patience, empathy, and sound judgment.

They pointed to cases that epitomize this inappropriate behavior. These included, but were not limited to, armed police personnel and civilian staff who knock on residents’ doors forcefully and shockingly, without respecting the sanctity of the homes and the well-being of the occupants. When they open the door, respondents explained, the collectors compel the first person who they encounter to come out and get into a special vehicle, which then drives them to respective district administrations. There they are allegedly held in open spaces without shade to protect them from the sun’s heat. These people are kept until the due payment is made by the landlord or they are vouched for by a relative from the district administration or another person connected to the district administration.

Tenant participants vigorously complained that tax collection officers wrongly detain random members of the families of the target properties, even if taxes are not owed by them personally. Instead, they argue, property taxes are owed by landlords. Similarly, they criticised tax collectors for coming to houses when only minors and elderly people are present, while the parents are out at work. Participants narrated to SPA researchers terrible examples of minors and mothers feeding infants who were forcibly taken to district administrations for the taxes on their houses to be paid.

The indignation was not limited to the residents of the properties but was also felt by businesspeople, including small business owners in the markets of the city, who vociferously vented their anger. This group grumbled about the bad treatment they usually receive from tax collectors when their yearly licenses expire or when daily market taxes are collected from street vendors in different markets of the city. Participants complained that when tax collectors find that a business license has expired, they close the shutters of the business while it is still in operation and customers are being served.

Participants identified cases where tax collectors kicked the wheelbarrows of hawkers when they could not pay the daily market fees, causing their items to get mixed up with those of neighboring creating difficulties for the victims to separate the jumbled items. More worryingly, they reported that during the rainy seasons, if street vendors could not afford to pay the daily market fees, they risked having their items thrown in the mud as a consequence. Respondents recognized that such improper behaviors can certainly discourage people from paying taxes voluntarily, entrench distrust towards government authorities, and reinforce the long-held assumption among the people that the government is predatory.

Legal Framework

Legal frameworks are prerequisites for any attempt to raise any kind of revenue by government bodies. With that truism in mind, we asked study respondents to what extent they believe that BRA-collected tax revenue has a legal framework or if they know of the existence of legislation that grants BRA the power to raise the different types of tax revenue it collects from various segments of the local population. All respondents  admitted their complete lack of knowledge of any legislation in place that could justify the various tax revenues and rates being collected.

Participants thought that the tax revenue BRA raises is legal as long as an administration is involved in collecting this, innocently connecting the legality of the taxes with the administration in place. This explains how local people are unaware of the requirement of legislation for revenue collection and that an administration has no right to engage in revenue raising without having the necessary legal frameworks that grant it such powers. Legal frameworks determine which types of revenue and rates are being collected and by which authority.

Notwithstanding this, sources from BRA contended that there is no legislation either inherited from the military regime or legislated by the federal parliament for BRA to warrant the tax revenue it collects. Instead, it relies only on directives from the sitting mayor and governor of Benadir at the time, who introduces new types of revenue taxes and rates to be collected.

Limited Transparency and Public Services

We asked the FGD participants and key informants we interviewed to what extent they are satisfied, or believe others are satisfied, with the taxes they pay to BRA. They categorically responded that they are unsatisfied with BRA taxes. They explained their dissatisfaction by stating that they do not see any return on their taxes in the form of public services provided by BRA. Similarly, they cited a lack of BRA transparency and accountability regarding the tax revenue being collected from the local people as another reason for their dissatisfaction. However, they said they pay the taxes to extricate themselves and their family members from the harassment and persecution they regularly face from BRA tax collectors.

The Way Forward

These preliminary findings from discussions with study participants present a chilling portrait of the state of BRA tax revenue collection exercises and call for urgent reforms. Primarily, these would include the establishment of legislation by the federal parliament, as the status of BRA is still unclear and it falls under the control of the federal government. The BRA, first and foremost, needs legal frameworks that set out the types of revenue and rates for each, giving local people legal justification to pay taxes, which would otherwise take the form of illegal extraction of money from the people. Likewise, BRA should rehabilitate its tainted image and reputation among the local people by being transparent and accountable about its revenue and expenditure and by assigning revenue collection to young, qualified staff with necessary training on how to interact and engage with taxpayers.