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Société civile, associations et pouvoir local au Yémen

Sarah Ben Nefissa
Maggy Grabundzija
Jean Lambert

Chapter 3: NGO’s and Local Governance

Financial Mechanisms of Decentralization and the Taxation of Qat (abstract)

Peer Gatter

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Texte intégral

1An ambitious Decentralization project has been launched by the Yemenite government with the enactment of Law No. 4 of 2000 “concerning local Authority”. Decentralization is considered by many as a major step forward in nation building and democratic development. However, the extreme lack of financial resources at the local level is one of the main challenges for the process of decentralization in Yemen.

2Peer Gatter analyses in his article the funding sources of local administrations in Yemen and comes to the conclusion that an efficient taxation of the production and consumption of qat, a psychoactive stimulant widely consumed in Yemen, could be a major step towards more financial autonomy for the local administration.

3A short introduction to the historical origins administrative structure outlines the evolution from the implementation of rudimentary de-centralized structures before Yemen‘s Unity, passing by an unbalanced and redundant administration with a high concentration of officials in the capital after reunification, to the first local council elections in 2001. Today, as a result of the reorganization of administrative units between 1998 and 2001, each administrative division has its own elected local authority. Due to the enactment of the Law of 2000, the functions and duties of governors and district directors are for the first time clearly defined.

4Peer Gatter gives an overview of the funding sources available to Local Administrations: District Local Revenues, Shared Governorate Revenues, Shared General (Central) Revenues and Central Subsidies. Out of these four only the first two, which are locally generated revenues can be used by the local administrations independently from central authorities. As for the second two revenues, they continue to be administrated by the Ministry of Local Administration and the Ministry of Finance. This explains the low budgetary power of most governorates and district administrations.

5The author explains the reasons for the lack of financial resources on a local level. Since the level of taxation and fees of which local administrations benefit was set by a cabinet resolution, local bodies have no right to adjust taxes and fees to inflation rates. The rampant inflation of the Yemeni Rial renders a majority of fees and tax yields practically worthless today. An exception is the zakāt (a religious alm tax meant to purify wealth), 15.8 % of which is raised on the qat production as well as the qat consumption tax. The latter constitutes the biggest single funding source for local authorities as it accounts for approximately 60 % of locally collected tax revenue. In many governorates (for example in Sa’da, Hodeida and Hajja), qat revenues account for more than three quarters of the tax income. These facts show clearly the importance of qat as a financial resource to local administrations. Qat is also submitted to a national Youth and Sport Tax, as well as a Public Cleaning Tax.

6The future success of Yemen’s decentralization process depends on the financial resources that can be mobilized locally since central transfers remain inadequate and unreliable. According to the author, it is unlikely that central funding will significantly increase over coming years. This is why the only way to increase local resources is by increasing tax revenue. Since local councils cannot increase the level of taxation, making tax collection more efficient is their only option. The most potential for increasing local fiscal revenue, so believes the author, lays in the maximization of the zakāt revenues and especially the qat consumption tax revenue.

7Globally, qat accounts for 10 % of the country’s GDP, for a third of the agricultural GDP and for 9.4 % of household expenditure. However, for several reasons, the taxation of qat produces inequalities amongst the governorates. First of all production is limited to the highlands and the consumption level varies for cultural reasons from area to area. Therefore some governorates benefit necessarily more of taxation on production and others on consumption. Secondly the consumption tax revenues are collected in and thus benefit the consumption areas which are often different from the production areas. At last efficiency of tax collection is higher in urban than in remote rural areas.

8Despite of these problems, the author is convinced that de-centralized collection of qat consumption tax is much more efficient than centralized collection system, since locals are more willing to pay taxes if they know that these funds will be used towards local development projects.

9In many areas of Yemen, in local council meetings, qat is believed to stimulate ideas, generate understanding and help the mediation of conflicts. One could thus say that qat can be not only a financial, but also a social and organizational motor for decentralization.

10At the same time, qat is also at the origin of several negative effects on health, agricultural and social level, and taxing on qat can therefore be compared to taxation of cigarettes and alcohol consumption in Western countries. Therefore, taxation can be also considered as a means of reducing consumption.

11One of the future challenges for Yemen local development will be to find a rational balance between the positive and negative effects of qat cultivation and consumption.


PhD Student, Tübingen University

© Centre français d’archéologie et de sciences sociales, 2008

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