The Political Economy of Taxation in Somalia: Historical Legacies, Informal Institutions, and Political Settlements

Despite significant externally driven efforts to strengthen the reach of the state in recent years, the government of Somalia still has one of the weakest tax capacities in the world, with a tax-to-GDP ratio of about 2 per cent. Many accounts of the tax challenges facing Somalia start with reference to the collapse of the state in 1991, and focus on the conflict and instability that followed. In this paper we draw attention to the historical legacies of weak taxation that predate recent conflict, and analyse the broader political economy of conflict and taxation that limit both the state’s capacity and will to tax. Top-down or technocratic institution-building is destined to fail if it does not take into account these political economy dynamics, and transform underlying political and social relations, and informal institutions.

Summary of ICTD Working Paper 216.