The Sudanese ministry of finance recently decided to increase taxes on traders and stressed that this decision would not lead to a hike in inflation in the country.
What happened? Fuel companies and service stations in Sudan stopped working for two days, 2-3 October, in a row leading to traffic jams as cars lined up in long queues at a handful of government-owned stations that are still operational including Bashayer, Nabta, and Nile.
Private gas stations on the other hand are on strike joining a wave of closures by other lines of businesses in different parts of the country to protest high tax bills.
Sudan Tribune conducted a tour and witnessed several gas stations in Khartoum that were completely shut down.
How did it start? Owners of gas stations put the blame squarely on tax authorities. “It was the tax administration that got us here and pushed us down the path of strike,” said one.
The common complaint was that their tax bills increased by as high as 100% over the 2021 estimates. They failed to reach a compromise with the finance ministry.
Is civil disobedience in the works? Since last Tuesday the markets in the city of el-Obeid city and other major cities in the state of North Kordofan started a complete closure of wholesale and retail shops irking local residents in these areas.
“The closure extended to groceries and retail stores that operate within neighbourhoods. It was a total strike, and it became difficult to obtain our daily needs of commodities,” said Omer Rabah, who lives in Tandalti town.
“The tax imposed on me exceeds the total capital that I work with. When I rebutted using my financial data and records that I submitted to the tax office at their request, an employee told me in an informal way that the data that taxpayers submit is a mere formality and tax employees often don’t look at it when making their tax assessments,” added another trader in the city who spoke to Sudan Tribune over the phone.
Economic experts say that the 2022 budget set a ceiling for tax revenues of about 1.943 billion Sudanese pounds which is an increase of 145% over the 2021 budget. Tax revenues represent about 58% of total revenues.”
But tax officials argue that the increases are in line with the state of inflation in the country and that price levels have been steadily rising which suggest an increase in profits.
One tax employee, who spoke to Sudan Tribune on condition of anonymity said: “It is not true that the increase amounted to 600% in some cases. The largest increase was placed on the manifest for transport vehicles which is far less than that percentage”.
“The rate of increase in value-added tax for this year amounted to 17% instead of 10% and has been stable over the past years,” he added.
Merchants in the al-Sajana market reject this claim and say that taxes utilize illegal and illogical tactics as they use exorbitant estimates and aim to drag business owners into bargaining with the committees they form to appeal which end up agreeing to a smaller tax bill but still not commensurate with the volume of business.
“The tax collectors descend on us with policemen, and they force you to make a choice; either pay or shut down,” says the one steel factory dealer in al-Sajana. “To even qualify for appeal you must pay 50% of the estimated tax bill upfront and sometimes this is not possible.”
Tax officials who spoke to Sudan Tribune acknowledged the impact of the tax increases on the deteriorating economic situation, especially on the weaker segments of society.
This comes at a time when Sudan is at the bottom of the list of countries where per capita GDP has decreased and according to the EconWatch list.
The per capita GDP in US dollars dropped by 76% since 2017 and Sudan ranked 164 out of 165 countries on the list.
Source: Sudan Tribune