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Supporting Sudan’s Democratic Transition Through Revenue Transparency

While easy to overlook given the scale of Sudan’s challenges, tax transparency initiatives are one of the most meaningful opportunities for a civilian-led Sudanese state to demonstrate “quick wins” to a public that is desperate for change.

In April 2019 non-violent Sudanese protestors achieved the once inconceivable and ended nearly 30-years of Omer Al-Bashir’s authoritarian rule. Frustration with the country’s political bargain, which worked well for a cadre of military-aligned officials in power while everyday Sudanese citizens struggled to purchase essential wheat and fuel, was at the initial heart of the civic movement. Even as most Sudanese continue to suffer from the country’s perilous political economy, few people in civil society, on the street, or even within government understand where or how the country raises its revenues or spends them.

Sociologist Rudolf Goldscheid’s dictum that the “budget is the skeleton of the state stripped of all misleading ideologies” underscores the importance of a country’s revenue base beyond just the purview of statisticians. Citizens tend to think about the state’s revenue base, and particularly taxes, as tools for a government to pay for roads, schools, hospitals, and a host of other public services. However, taxes can do so much more than just finance public goods; as a breadth of scholarship illustrates, taxes are the primary tool that catalyzes a fiscal-social contract between the people and the state over the role of government in their lives.

To redress this public knowledge gap, we, alongside Raga Makawi, created a Sudanese research network that conducted 300 detailed interviews with activists, traders, government officials, and other key members of the community. Since Sudan’s economy is the product of decades of extractive rule that can be traced back to British-led colonial occupation and beyond, these interviews were supplemented by archival research conducted in the Sudanese state archives in Khartoum. Our findings are published in a newly released research report from the LSE Conflict and Civicness Research Group and Peace and Conflict Evidence Research Platform (PeaceRep) entitled ‘The Everyday Politics of Sudan’s Tax System: Identifying Prospects for Reform’.

Far from technocratic elements of government, official reporting on taxes in Sudan is deeply political. Interviews with ministry of finance and economic planning officials reveal the extent to which transfers from states to the national government are difficult to trace. Complicating matters further, data on transfers is recorded by sector rather than by state. Though this might initially appear to be a minor analytical inconvenience, it has a more complex history. Just before Sudan’s 1956 independence from the British-led colonial regime, the colonial administration consciously chose to avoid publishing numbers about Sudan’s economy for fear of making regional inequities obvious to the public. Rather than buck this trend, subsequent post-independence regimes followed suit. The implications of the persistent turn toward economic planning “based on prose” rather than the “readily quantifiable” has contributed to regional tensions between Khartoum and the country’s vast social and economic peripheries that endures today.

The inherent obfuscation of Sudanese tax data contributes to tense competition over taxes among local, state-level, and national authorities. Our research includes examples such how some central bank of Sudan representatives blocked a digital transformation project that would have shared banking sector information with the national tax chamber to minimize tax evasion. Rather than embrace the opportunity to both raise additional revenue and increase revenue transparency, central bank officials feared the initiative would lead to the elite rejection of the banking system if tax authorities had more oversight.

Revenue opacity has thus enabled extractive government policies that are at the heart of Sudan’s socio-political and economic instability, which has likely included the illicit financing of armed actors in conflict-affected parts of the country. This follows patterns embraced by Bashir’s regime, which maintained a decades-long stronghold on power because there were so few options outside of the state for the ruling elite to reliably obtain revenues. Our interviews with administrators within Sudan’s taxation chamber’s middle management unsurprisingly underscored how members of the country’s business community maintain privileged ties to the taxation body. Essentially, prominent tax offenders are consequently rarely audited.

Our findings contrast with research from other developing countries, which illustrates how taxes bind people to government rather than primarily support a variety of sub-elites—more than just elite Sudanese business owners. As opposed to many other countries, Sudan’s murky tax system ensures that the government is not even the primary entity collecting taxes. The labyrinthine system encourages a variety of bridges between government taxation offices and taxpayers. For a negotiated fee, those networks profit from Sudan’s obscure taxation collection practices and these tolls effectively function as an additional tax upon the government mandated tax.

These challenges have made it easy to gloss over how taxes are still a vital tool for supporting Sudan’s democratic movement. While easy to overlook given the scale of Sudan’s challenges, tax transparency initiatives are one of the most meaningful opportunities for a civilian-led Sudanese state to demonstrate “quick wins” to a public that is desperate for change. This is opposed to typical state tax reform efforts that are focused on raising additional state finances since tax reforms alone are unlikely to fill Sudan’s enormous fiscal deficit. Similarly, and akin to other developing countries, taxing the county’s vast informal economy is also unlikely to be a “silver bullet” for expanding Sudan’s budget. However, tax policies that ignore local, national, and regional dimensions of the country’s conflict could increase instability in an already delicate historical moment.

Our primary policy recommendation therefore calls for politically sensitive investment in local fiscal transparency initiatives around taxes and local government expenditure. This starts with supporting different types of civic actors, who have thus far been ignored in the crucial fight for tax reforms that more meaningfully finance public services rather than illicit activities and elite capture. Relevant groups include Friedrich Ebert Stiftung’s recent Sudanese civil society-wide initiative engaging civil actors in the establishment of a more egalitarian credit and debt reservicing scheme for Sudan. This conference was preceded by several grassroots initiatives aimed at centering a tax-based social contract for future political programs working toward a democratic transition.

The multitude of revolutionary neighborhood committees are another powerful example of a demand-led entity re-articulating the language of rights in the context of the state’s responsibility of service provision and a tax-based citizen-state contract. These debates can be traced to the 2018 Sudan revolution and contribute to a new brand of civic activism that centers concern about labor, tax, productivity, a functional state bureaucracy, and anti-corruption as a means of achieving democracy. These discussions challenge and depart from the public discourse that emerged as part of the 2005 Comprehensive Peace Agreement, which sought to redress Sudan’s ethnic and gender divisions and paved the way for South Sudan’s independence.

The Coalition of Demand-based Bodies (Tajamou al-Ajsam al-Matlabia), which is an alliance of 55+ grassroot organizations across Sudan, is another pertinent body. The association includes organizations advocating for environmental rights in oil and former industrial production areas, groups advocating against the building of dams, representatives from economically marginalized communities such as internally displaced groups, oft-neglected pastoralists communities, farmers’ groups, agricultural workers, and others. Several of the coalition’s policy areas target the revenue allocation of extractive industries and businesses operating in the regions of the communities represented by organizations within the coalition. Additionally, the think-tank ISTinaD bolsters the coalition of demand-based bodies’ efforts with its focus on policy solutions that revolve around people’s everyday politics (a co-author of this article is a co-founder of ISTinaD).

We also recommend that the Sudanese government and international donors collaboratively establish a Commission on Revenue Allocation or incorporate one into existing mechanisms. A Sudanese Commission on Revenue Allocation would foster a participatory Sudanese national dialogue on devolution that incorporates state and national government officials, large elite businesses, and small and medium businesses, and would generate a long-term process to facilitate transparency and redress fiscal inequities. Akin to the Kenyan example, a Sudanese commission would ideally include a constitutionally mandated formula for equitable subnational state revenue sharing. The new National Commission on Revenue Allocation, which is headed by an independent expert who reports to the prime minister is another government body that could either host a Commission on Revenue Allocation or become the focus of similar policy reforms. State-level institutions within Sudan that could aid in the implementation of these reforms include the National Revenue Fund, which the National Treasury administers and “covers all accounts and sub-funds into which monies due to the government are collected, reported or deposited.”

A related recommendation is to continue exploring the political feasibility of efforts to tax elite businesses and individuals via the Large Taxpayer Unit within Sudan’s ministry of finance and economic planning. However, since the challenge of targeting well connected elite taxpayers in Sudan is at the heart of the country’s extractive political marketplace, the topic must be approached sensitively. One powerful way to overcome this is through civic engagement or even potential oversight of any revised approaches to the existing Large Taxpayer Unit. Given the limited number of studies on Large Taxpayer Units in conflict affected countries and/or societies in transition, another recommendation is to commence a rapid lesson learning study that draws on lessons from similar countries or contexts.

Finally, we practically suggest both international donors and the Sudanese government also support initiatives to expand the skills of tax collectors within the country. Our interviews with tax collectors found that limited IT capacity and lackluster training were non-political reasons for low revenue mobilization. Thus, even basic technical efforts to improve these areas would also generate necessary technical reforms. Like all our suggested reforms, this would not cost the already cash strapped government and international donor community big amounts of political or economic capital but would still crucially support tax transparency in the country.

Dr. Matthew Benson is the Sudan Research Director within the Conflict and Civicness Research Group at the London School of Economics and the Research Manager for the LSE CCRG’s contribution to the Peace and Conflict Resolution Evidence Platform (PeaceRep).

Muzan Alneel is a former Nonresident Fellow at the Tahrir Institute for Middle East Policy, and is a writer and public speaker with an interdisciplinary professional and academic background (engineering, socioeconomics, and public policy).


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