Extraction of revenues from the informal sector has repeatedly been mentioned as one of the means to improving domestic resource mobilisation (ILO, 2002; Rutasitara et al. 2010; Fjeldstad, 2013; Udoh, 2015). However, little is known about sustainable ways of taxing the sector due to administrative and logistic problems and political obstacles (Joshi & Ayee, 2002). With a long-term objective, strategic formalisation is mentioned as one of the ways forward to sustainably tax the informal sector (Rutasitara, et al. 2010; ILO, 2002; USAID, 2005) and in due course lead to more rapid growth. Nevertheless, there is no conclusive evidence that formalisation in itself is a main cause of economic growth (USAID, 2005; Joshi, et al. 2014; Mutakyahwa, 2012). Irrespective of different efforts and initiatives by the government of Tanzania (policy changes over time) to formalise the informal sector, it continues to thrive with millions of people engaged in economic activities that are unrecorded, legally unrecognised, and unprotected. One among many constraints is politicians' accord with informal sector operators that once they elect and put them into office, they will neither enforce formalization nor collect taxes from the informal sector operators.
The purpose of this study is therefore to use bargaining theory to find out why street operators (machinga) are conforming with politicians’ promise of exchanging votes in return for non-formalisation of businesses, despite the advantages and efforts made by the government to formalise informal businesses. To investigate this, relevant policies and other documents will be reviewed. Additionally, qualitative and quantitative data will be collected, using interviews and surveys in three different municipalities in Dar es Salaam city to learn any variations in the formalisation of the machinga. The results of this study will enhance the understanding of the reasons behind which machinga exchange votes in return of politicians' protection from formalisation of businesses. It will also show how the machingas manage to avoid to formalise and their interest to or not to formalise. Also, the findings will contribute knowledge on how exactly bargaining works in the formalisation literature.