their incentives by creating the impression of new investment where none exists – for example through “sales” to offshore holding companies controlled by the same actors. Presumptive taxes on small businesses may sometimes have similar effects if the metrics used to calculate burdens are poorly calibrated.<sup>122</sup> More extreme policy-driven inequities often arise at the local government level, owing to the often fragmented and opportunistic nature of local taxes. One ubiquitous example is comparatively high tax burdens on market traders, who have relatively low incomes but are an easily accessible tax base for local governments. Even within markets, flat rate taxes often mean that lower-income traders end up paying higher overall rates.<sup>123</sup> These inequities frequently also have strong gender dimensions, with market trade dominated by female traders.<sup>124</sup> In similar fashion, property taxes that are based entirely on the value of land may end up imposing the same tax on households with similar plots of land, despite one hosting a one bedroom home and the other a large mansion.<sup>125</sup> Local government revenue systems are also frequently (though decreasingly) characterized by large numbers of so-called “nuisance taxes” – highly idiosyncratic taxes on particular activities like brewing beer, raising livestock, holding a wedding, transporting certain goods and so forth. The result is that households with similar incomes may bear vastly higher tax burdens if they operate in an easily taxed sector.<sup>126</sup> The significant vertical inequity within many developing country tax systems is receiving mounting attention amid growing concerns about inequality. Most, though not all, tax systems aim to be progressive in incidence among individual taxpayers, such that the share of income paid in taxes increases with overall income and wealth. To achieve this goal, most tax systems rely primarily on income taxes with progressive rates, while property taxes also have the potential to contribute to the overall progressivity of tax systems in the context of skyrocketing property values in many places.<sup>127</sup> However, these potentially progressive taxes are (by a significant margin) the least well-enforced major taxes in almost all low-income countries.<sup>128</sup> Historically, some countries

> 122 This was the case, for example, in Ethiopia where highly detailed rates for different sectors, and at times subjective assessments, resulted in heavy burdens on some firms. Prichard, W. (2015). _Taxation, responsiveness and accountability in developing countries: The dynamics of tax bargaining_ . Vol. PhD Thesis. Cambridge: Cambridge University Press.

123 Akpan, I., & Sempere, K. (2019). Hidden inequalities: Tax challenges of market women in Enugu and Kaduna states, Nigeria. _ICTD Working Paper 97_ . Brighton: International Centre for Tax and Development.

124 Prichard, W., & van den Boogaard, V. (2017). Norms, power and the socially embedded realities of market taxation in Northern Ghana. _African Studies Review_ , 60 (1):171-194; Siebert, M., & Mbise, A. (2018). Toilets not taxes: Gender inequity in Dar es Salaam’s city markets. _ICTD Working Paper 89._ Brighton: International Centre for Tax and Development.; Akpan, I., & Sempere, K. (2019). Hidden inequalities: Tax challenges of market women in Enugu and Kaduna states, Nigeria. _ICTD Working Paper 97_ . Brighton: International Centre for Tax and Development.; Ligomeka, W. (2019). Expensive to be a female trader: The reality of taxation of flea market traders in Zimbabwe. _ICTD Research in Brief 35_ . Brighton: International Centre for Tax and Development. 125 Taxation exclusively of land is relatively uncommon, but exists, for example, in Kenya. In turn, in many other countries, valuations of improvements on land fail to capture their actual value, distorting tax liabilities.

126 Paler, L., Prichard, W., Sanchez de la Sierra, R., & Samii, C. (2017). Survey on total tax burden in the DRC, Final Report. Kinshasa: Department for International Development.

> 127 Goodfellow, T. (2017). Taxing property in the neo-developmental state: The politics of urban land value capture in Rwanda and Ethiopia. _African Affairs,_ 116(475): 549–572 _._

> 128 Kangave, J., Nakato, S., Waiswa, R., & Lumala Zzimbe, P. (2016). Boosting revenue collection through taxing high net worth individuals: The case of Uganda. _ICTD Working Paper 45_ . Brighton: International Centre for Tax and Development.; Prichard, W. (2009). _Taxation and development in Ghana: Finance, equity and accountability_ . London: Tax Justice Network; Fairfield, T., & De Luis Jorrat, M. (2016). Top income shares, business profits, and effective tax rates in contemporary Chile. _The Review of Income and Wealth_ , 62(S1):S120-S144; Bird, R., & Zolt, E. (2005). Redistribution via taxation: The limited role of the personal income tax in developing countries. _International Tax Program Paper 0508_ . Toronto: Joseph L. Rotman School of Management.

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