The Informal Sector Tax Revenue Potential: A Case of Zimbabwe

Abstract

In this paper we sought to analyse the performance of informal sector tax revenue and to establish whether economic resources should be channelled to this sector in a bid to tax it. The study employed literature review method.  The evidence suggests that the informal sector play an important role in the Zimbabwean economy such as creating jobs, poverty eradication and also as a test bed from which willing taxpayers can graduate into mainstream however their contribution to the national tax revenue is insignificant despite Government efforts. We established that Zimbabwe has no effective mechanism to collect revenue from the informal sector. The study recommends that more resources be channelled to the informal sector due to high revenue potentials.

Keywords: Informal sector, presumptive tax, Tax revenue