Urban Planning Implications of Taxing The Informal Sector: Case Antananarivo

The informal sector encompasses everything that does not comply with the law: illicit or illegal activities that are not recorded in official registers or statistics. The informal sector is a defining feature of certain major cities in developing countries, including Antananarivo. As with any government agency, taxing this sector proves to be a major challenge. The decision to formalize the sector must take into account the resulting consequences, whether economic, social, fiscal, or urban planning-related. On the positive side, the informal sector complements its formal counterpart by absorbing the unemployed, and if an adequate tax system can be established, tax revenue will benefit significantly. On the other hand, it could be fatal for a volatile economy like that of the Urban Commune of Antananarivo, particularly by projecting a chaotic image of the city. The informal sector presents a dilemma where the right balance must be found so that everyone emerges a winner from the decisions made.