EDITORIAL: We must walk the talk on broadening tax base

What you need to know:

  • In the case of income tax, for instance, the tax base is determined by the tax authorities stating exactly the minimum amount of annual income that can be taxed. To widen or broaden the tax base takes different forms – all with the objective of maximising tax revenues.

The proposal to widen Tanzania’s tax base is as old as the yonder hills. Tax base here means the aggregate value of the financial streams or assets on which tax can be imposed. Basically, there are two forms of taxes: direct (such as income and corporate taxes) and indirect taxes: sales tax, customs and excise duties.

In the case of income tax, for instance, the tax base is determined by the tax authorities stating exactly the minimum amount of annual income that can be taxed. To widen or broaden the tax base takes different forms – all with the objective of maximising tax revenues.

This can, for example, be achieved by roping into the tax net more or new taxpayers (individuals and corporates) through reducing tax exemptions, lowering the taxable income threshold, and shifting more entrepreneurs from the informal into the formal economy.

Other ways are taxing more goods or services that were not taxed; eliminating tax loopholes, and enhancing ‘voluntary tax compliance’ through such ploys as lowering inordinately high tax rates, reducing multiplicity of taxes that are counterproductive, and creating taxpayer-friendly regime.

But, maximising Tanzania’s tax base has been more talk than walk on the ground. Now that the Tanzania Private Sector Foundation (TPSF) – the umbrella organisation of the business community – has stepped into the breach by pressurising the government to broaden the tax base, we may finally see action on the ground.

TPSF is focusing on formalising the informal sector which, it says, hogs some 60 per cent of the national economy – and has vast tax revenues potential to lessen the burden on extant taxpayers. The fate of the Foundation’s proposals will be known along with the FY-2018/19 budget and related Finance Act-2018 – hopefully, we will have finally walked the talk.

Hope for anaemia control

The World Health Organisation (WHO) once described anaemia as a ‘silent burden’ in Tanzania. The threat this disease poses to children and expectant mothers is still as real as ever. Recent studies suggest, for instance, that anaemia prevalence in children aged between six and 59 months is around 58 per cent. It is also estimated to be around 45 per cent among women of reproductive age, according to the Tanzania Demographic and Health Survey and Malaria Survey. In Zanzibar, it’s worse amongst all age groups. One of the major causes of anaemia is poor nutrition – specifically the lack of iron or vitamins. This means that with the right nutrition, there is hope that the situation can be contained. The good news is that there are fresh efforts to address the challenge – with the release of two bean varieties enriched with iron and zinc. The release of these varieties is said to have come after years of intensive research and trials. The International Centre for Tropical Agriculture (CIAT) and Pan African Bean Research Alliance are optimistic that the new bean seed varieties will go a long way in the fight against anaemia in Tanzania. This is because of the fact that beans are widely consumed in Tanzanian households.