Tanzania: Why Tax Collection Hit Record 2.77tri/-

THE record 2.77tri/- revenue collection in December last year has been attributed to President Samia Suluhu Hassan’s bold initiative to transform the country’s tax administration system.

The collection exceeded the 2.60tri/- target, and is equivalent to 10.3 per cent growth compared to 2.51tri/- in the corresponding period last year.

Also, the Tanzania Revenue Authority (TRA) has set another historic record in the half year 2022/23 collection, after collecting 12.46tri/-, which is equivalent to 99 per cent of the 12.48tri/- target. This makes up an increase of 1.35tri/- as compared to a collection of 11.11tri/- recorded in the same period last year, indicating a growth of 12.2 per cent.

In a statement released on Sunday, the TRA Commissioner, Mr Alphayo Kidata attributed the collection success to the use of the reconciling system directive by President Samia that has created an enabling environment of trade and investment within the country.

“Aside from surpassing the December 2022 target, the historic collection is the highest to be recorded since TRA was established in 1996, thanks to government continued support in the improvement of effective systems,” said Mr Kidata.

He added that a good rapport has continued to be strengthened with taxpayers triggering a steady voluntary tax payment.

In gaining more returns in the near future, the TRA boss urged traders to issue electronic receipts as per the law; the same applies to buyers to demand for the receipts after making their purchases.

“We are confident that the good relations will be fostered further in achieving arriving at the set collection goal of 24.76tri/- in the financial year 2022/2023,” said Mr Kidata.

Such a move has been hailed by economists, pointing out that this implied impressive growth of economic activities coupled with a widened tax base, both of which are good for the economy.

Commenting on the achievement, Head of Research and Analytics at Alpha Capital, Mr Imani Muhingo said that the achievement will minimise the fiscal budget deficit, leaving a larger room for strategic monetary policy maneuvre.

A seasoned economist-cum-banker, Dr Hildebrand Shayo noted that this is an outcome of the government’s deliberate efforts to put in place an enabling environment for easier payment of taxes by initiating measures such as the electronic tax filing system.

In this way, he indicated technology as a fact for improving efficiency and reducing prospects for corruption amongst dishonest employees from TRA and taxpayers on the other hand.

“The improvement in the country’s ability to mobilise revenue if it continues with the same spirit could help the president lead the government to finance most public social services using domestically generated sources,” said Dr Shayo.

Elaborating, he pointed out that the achievement communicates on how best the country can increase tax revenue, suggesting that while there is no one-size-fits-all solution, there are a few lessons that the government need to hand on to maintain this achievement as the New Year 2023 begins.

He advised TRA to embark on sustained effort to ensure high-level political commitment from all stakeholders, claiming that social dialogue enhances the likelihood of reforms being implemented and sustained.

“Effective communication with stakeholders that emphasises the intended benefits of reforms can help overcome the resistance of vested interests. TRA needs to remember that compensating the losers has proved efficient in winning public support for tax reform initiatives to improve compliance,” noted Dr Shayo.

He further stressed the need to improve the smart use of information management systems because in the modern digital economy, successful revenue mobilisation hinges on managing information and leveraging the power of big data to improve compliance and fight corruption.

“IT systems when wisely and widely used can effectively leapfrog TRA revenue collection for 2023 and beyond,” he said.

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