Week 33 of 2024 brought an overwhelming influx of reports, emails, and letters. As mentioned in earlier posts, the challenges facing Somalis continue to mount. This week, the focus shifts to the introduction of a 5% VAT tax in Somalia, which has sparked significant discussion on social media and among the Somali diaspora.
The key issue isn't just the tax itself, but the broader context—how it reflects the state of governance in Somalia. For effective tax collection, robust government institutions are essential, something that remains a work in progress, especially in a country recovering from years of instability. This has also attracted the attention of many Somalis in the diaspora. But what does it really mean for the average Somali punter? I guess before we discuss tax, it might be useful to remind ourselves that it is important to have properly functioning government institutions to introduce and manage tax, from collection as revenue to spending it as expenditure.
At the heart of the issue lies the concept of the social contract, a fundamental principle in political science that Somalis have historically struggled to accept. Strengthening this social contract is critical for stabilizing the nation and improving tax collection mechanisms. Without it, weak governance and low public trust continue to hinder the state's ability to mobilize domestic resources. A strengthened social contract would legitimize the government's authority and foster a reciprocal relationship between the state and its citizens, where the provision of public services is linked to citizens' tax compliance. This trust is vital for Somalia's transition from fragility to sustainable economic and social development.
I have covered the above in my last week’s 5 minutes of fame episode, see here and the Somali president reacting to some of the issues raised see here . Also see here for earlier comments on the the diaspora contribution.
Somali President explains.... (youtube.com)
Here is my considered position regarding the Somali MPs. The parliament should provide information on what they do? What is their contribution during their term Addressing the role of Somali MPs, it's evident that there is a disconnect between their responsibilities and public expectations. The suggestion of a 50% salary reduction for MPs, coupled with greater transparency about their contributions, underscores the need for accountability.
What does all this mean? It simply means the Somali MPs are not elected, and many do not know what is their role in the government, I recommend this to them. Am not expecting that they will contribute meaningful input to the tax issue. Finally, to keep our youth off the streets, one solution might be 1-2 years of national service. I have shared my views on this in many fora, and will repeat here again… National Service! Moreover, the importance of engaging youth, potentially through a 1-2 year national service program, should be highlighted as a priority for the nation's future.
I’ll keep watching and working to make sense of it all in the forthcoming postcards. As always, I will continue to observe and analyze developments from my new base in the Asia Pacific region.
See you next week, Mohamed.
To tax or not that should never be the question